Published quarterly in MiBiz.  This edition features the April 14, 2008 report.

Below are all stories published in this editon of SBAM Small Business Barometer. Click on the image to the right to view a pdf of our printed edition in MiBiz.

In this edition: About the Barometer | Health Insurance costs | Tax credit for health care costs

About the Small Business Barometer

Monday, April 14, 2008 - MiBiz

By Michael Rogers
Vice President Communications

In this edition of the SBAM Barometer report, we’re taking a closer look at research done in the fall of 2007 on small business health insurance costs.

The Small Business Barometer is a study that examines the small business community throughout Michigan. Through telephone interviews with Michigan small business owners, all members of the Small Business Association of Michigan (SBAM), the study tracks advances and declines in the Michigan business climate from the perspective of small business. The Small Business Foundation of Michigan (SBFM), established by SBAM, sponsors the project with the support and participation of the Center for Urban Studies at Wayne State University in partnership with MiBiz, Crain’s Detroit Business, the Greater Lansing Business Monthly and Upper Peninsula Business Today. The author can be contacted at mwr@sbam.org and (800) 362-5461.

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In this edition: About the Barometer | Health Insurance costs | Tax credit for health care costs

Health Insurance costs

Monday, April 14, 2008 - MiBiz

Michigan small business owners were asked if their business currently has a company health insurance plan. As shown in the chart below, the majority of small businesses continue to report that they have a company health insurance plan.

The proportion of small businesses that have reported offering health insurance benefits to their employees has been falling since 2003. Nevertheless, the fraction of those offering health benefits to their employees has stayed above the 75 percent level over the past seven years.

Respondents who reported that their company did not have an insurance plan were asked to comment on the most important reason for this decision. The figure below captures their responses.

Among the small businesses responding to this wave’s survey, the primary reason mentioned for not carrying their own health insurance plan was that employees’ health insurance was covered under a spouse or other relative’s insurance policy. About a third of the small businesses surveyed mentioned the cost factor as the rationale for not offering health insurance benefits.

This is a change from the previous year. In the 2006 Small Business Barometer survey, 74 percent of small businesses mentioned that "the cost was too high" and only 12 percent decided not to go in for a company insurance plan due to employees being covered under another relative’s policy.

Respondents to this wave’s Small Business Barometer survey were asked to express their agreement or disagreement with a series of statements. One such statement was a comment on the rising costs of health insurance for small businesses compared to big businesses.

Over half of all respondents (58 percent) feel that health insurance costs are rising more rapidly for small businesses. Only 8 percent are in disagreement.

Further, small businesses who reported that they did have a company health insurance plan were asked to comment on how the plan price had changed over the last 12 months. The table below shows their responses.

As a follow-up question, respondents were asked how the increase compared to increases they had seen over the previous three years. About 8% of respondents were unable or unwilling to comment on the increase, while 53% stated that the level of increase was about the same as the past three years. A fourth of those surveyed reported that the price of health insurance had increased more this year than over the past three years and 15% stated that the increase was in fact less than what they had seen over the past three years.

However, as shown in the following figure, the majority of Michigan small businesses surveyed do not feel that healthcare costs are a concern in regard to losing business to out-of state competitors.

Small businesses surveyed were asked to state what they felt was the most desirable way to control healthcare costs. The graph below illustrates their opinion with the response from the prior 2006 wave also included for comparison.

As before, there is no unanimous choice of policy option for controlling healthcare costs. It appears that support for HSAs has risen over the past year, while small business support for individual health insurance mandates, employer purchasing groups, and association health plans has fallen.