In Vermont, AARP has been a proponent of Catamount Health and its mission to provide affordable, quality health care to uninsured individuals in the state, and now is focused on expanding this health plan to small businesses and the self-employed. The purpose of this study was to better understand what Vermont’s small business owners have been experiencing due to health care costs, their opinions surrounding the issue, as well as whether and how Catamount Health might appeal to them if it was made available to small businesses and the self-employed. As such, AARP’s Vermont office commissioned this telephone survey of 400 Vermont businesses with 50 or fewer employees which took place between March 19 and April 2, 2008. 

The survey results show the majority of small businesses surveyed in Vermont are doing their best to provide health insurance for their employees. Beyond providing access, the majority are also contributing a large share of the cost of insurance for their employees. But, their motivation for providing insurance for their employees is not driven by their need to stay competitive. Instead, business owners appear to believe that they have an obligation to do so: three-quarters say they offer insurance because they feel they have a responsibility to provide it, and two-thirds strongly agree that it is important to be able to provide comprehensive and affordable coverage to their employees.

 

Despite this desire by most respondents to provide comprehensive, affordable health insurance, many businesses are not able to due to cost, and increasingly, even more are beginning to face this reality. Nearly all who are providing insurance say their premiums have increased over the past several years. In response, a considerable number of businesses have changed to high-deductible plans, increased employee contributions, reduced benefits, and even dropped their coverage. More troubling, this pattern is likely to continue with larger proportions of businesses reporting they will likely have to take these similar actions in the next few years as premiums continue to rise.

 

If Catamount Health was made available, affordably, to small businesses and the self-employed, the majority of small businesses—both those currently offering insurance and not—are likely to consider enrolling in the plan. Catamount Health’s greatest appeal would be affordability. Respondents say they would be much more likely to consider enrolling in the plan if their premiums would be less than what they or their employees currently pay. More specifically, the vast majority of respondents say in order for the premiums to be affordable, they would have to be less than $400 a month per individual.

 

Policy makers in the State of Vermont should recognize the valuable contributions of small businesses in making Vermont one of the states with the lowest rates of uninsured residents in the country.[1] Further, as policy makers plan for an expansion of Catamount Health, they should consider the results of this survey showing the shift toward high-deductible health care plans among small businesses who are faced with rapidly rising health care costs. These plans run counter to state efforts to control health care costs, embodied in the Vermont Health Care Affordability Act and the Vermont Blueprint for Health, which promote prevention and improved chronic care disease management.

Vermont is well-known for its independent and entrepreneurial character--a place where small businesses thrive and grow and are the engine of the state’s economy. In fact, the Census reports, in 2005, there were 19,591 businesses in Vermont—three-quarters of these businesses had fewer than 10 employees.[2] In addition, there were nearly 50,000 self-employed individuals in Vermont in 2002.[3]

 

Nearly all of Vermont’s large businesses (100% of businesses with 1000 or more employees; 90% of those with 100 or more employees) provided health insurance to their employees in 2005.[4] But for smaller businesses, the picture is different: only about half (48%) of businesses with less than 50 employees provided health insurance for their employees in this same year. 

 

The lack of affordable health care is a growing problem for Vermont, and one that affects businesses and employees both given the reliance of most adults on their employers for health insurance.[5] In a state like Vermont, where the majority of businesses are small, rapidly increasing health care costs can have detrimental affects on a business’s ability to stay competitive and thrive. For employees, rising costs may mean being moved to a high-deductible plan, increased cost-sharing with their employers, or a loss of insurance.

 

With those working for businesses with fewer than 10 employees being twice as likely to be uninsured than those who work for businesses with 100 or more,[6] AARP is working to help small businesses maintain their role in ensuring that residents have access to affordable, quality health care. In Vermont, AARP has been a proponent of Catamount Health and its mission to provide affordable, quality health care to uninsured individuals in the state, and now is focused on expanding this health plan to small businesses and the self-employed.

 

The purpose of this study was to better understand what Vermont’s small business owners have been experiencing due to health care costs, their opinions surrounding the issue, and whether and how Catamount Health might appeal to them if it was made available to small businesses and the self-employed. As such, AARP’s Vermont office commissioned WRI to conduct telephone interviews with business owners and decisions makers in 400 Vermont businesses that have 50 or fewer employees. Interviews for the study took place between March 19 and April 2, 2008. A full description of the methodology and the questionnaire used for this study can be found at the end of this report.