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Health Coverage Hits Small Businesses,
Says Chief of National Advocacy Group

San Antonio Express-News, July 16, 2004

Health insurance costs for small businesses are rising more than twice as fast as those for larger companies, according to Jack Faris, president of the National Federation of Independent Business, a 600,000-member small-business advocacy group.

At a meeting of nearly 50 San Antonio NFIB members this week, Faris said small-business health insurance costs are rising between 20-30 percent a year compared with the 8-9 percent annual increases large corporations are facing.

Nancy Fox, who makes health insurance decisions for the 11 employees of San Antonio-based BioMedical Enterprises, said her company experienced a 40 percent increase in health care costs in 2002. In the years since, she said, increases have been about 20 percent.

"Small businesses get the worst end of it by far because they have much less buying power," said Jack Plunkett, CEO of Houston-based Plunkett Research. An annual NFIB survey found rising health care costs to be the top small-business concern. It's held that rank since 1986.

Chuck Toudouze, president and co-owner of Toudouze Market, a 30-employee wholesale grocery supplier in downtown San Antonio, said providing health benefits is becoming a real struggle. His company has been experiencing double-digit increases in health care costs for the past several years.

To cut costs, Toudouze Market has increased deductibles, shopped around for a provider and begun sharing premium costs with employees.
"We're frustrated we're getting saddled with so many costs we have no control over," Toudouze said. "It's getting to the point where we won't be able to afford it (health benefits) anymore."

Rising costs are forcing many small businesses to cut benefits, Faris said. The percentage of NFIB members providing employee health benefits has fallen from 62 percent to 58 percent in the past five years.

Nationwide, including companies not involved with NFIB, 40 percent of small businesses offer health benefits.



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