Health Care Costs for Businesses Employing Less than 50 People Could Fall

Small business health care costs may be reduced as a result of the 2010 Affordable Health Care Act. Although small business health care plans may become more affordable, midsize and large companies will see a 4% increase in health insurance costs.

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Eric Stauffer is a former insurance agent and banker turned consumer advocate. His priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Sep 9, 2020

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A new study out by the Urban Institute is claiming that the effect on small businesses from the 2010 Affordable Health Care Act could actually be a reduction in health insurance costs, refuting many assumptions and studies up to this point. Most business owners have expressed concern with the new law, assuming it was going to force some of them to drop health care coverage for their employees’ altogether.

The gist of the report states that small businesses employing fewer than 50 people should see a reduction in overall cost per individual. The same report claims that midsize and large companies will see an increase in cost by just over 4%.

The report did not take into consideration the Medicare provision which is an attempt to lower the overall cost involved with the program.

The report also points out many small businesses are not capitalizing on the credits they are allowed in order to reduce the overall cost of their healthcare plans. In fact, in 2010, less than 15% of the companies eligible to receive the credits actually applied for them.

This new information will need to be substantiated by outside sources, because very few business owners believed their health care costs would go down as a result of the new law. This has been a strong position for the Romney campaign because of the added cost believed to be sticking onto businesses bottom lines.

As expected, the cost for midsize and large companies will go up, since the cost has to come from somewhere. The main point that this report shows as driving down the costs is the credits afforded to the small business owners.

It is probably too early to say this will definitely be the answer, since the report does not account for Medicare issues. Additionally, the timing is fairly suspect given the general election is coming up in less than a month and “Obamacare” has been a cornerstone of both parties.


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