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WASHINGTON-According to the American Nursery and Landscape Association, most working Americans receive health insurance from their employers. However, small firms with fewer than 100 employees find it particularly difficult to offer such benefits. Only 49 percent of those small businesses offer the insurance, compared with 98 percent of firms with over 100 employees. The difficulties that small businesses face in trying to offer quality, affordable health insurance explain a significant part of America's uninsured problem. Small firms employ 42 percent of all workers. Yet these workers and their families comprise 60 percent of the working uninsured.

While Medical Savings Account (MSA) expansion, tax credits and other policies will all help increase coverage, Association Health Plans (AHPs) are aimed squarely at the gap in coverage among small businesses. In order to understand why AHPs are part of the solution to expanding coverage, it's important to understand the barriers that prevent many small employers from offering coverage today.

Cost is clearly the biggest barrier for small employers that want to provide health insurance. For a variety of reasons, insurers typically charge small firms more per employee than large firms for comparable coverage. Small company premiums are 20 to 30 percent higher than those of large self-insured companies with similar claims per covered employee. Cost drivers include state regulatory burdens, administrative overhead, adverse selection, insurance company marketing and underwriting expenses, and vulnerability to insurance fraud. Small firms are likely to offer less generous benefits and more of their premiums are consumed by administrative costs.

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June 18, 2019, 6:47 pm PDT

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