Summary: Recognizing that employees of many small firms cannot obtain health insurance, states have increasingly sought to make health insurance for small businesses more affordable and accessible. Because of the difficulties in marketing new insurance policies to small firms and because most of the reforms have been introduced during the recession, it is too soon to tell whether the reforms will increase insurance coverage. Budget problems are limiting states' ability to adopt reform measures requiring substantial state subsidies or funding. As a result, states are tending to focus on reforms involving little or no cost to the state treasury. These reforms attempt to correct several serious problems in the market but have yet to significantly increase the number of small business employees with health insurance. Initiatives requiring state subsidization of the small business market are rarer, tend to be limited in scope and duration, and have produced limited results. Attempts to lower the cost of insurance by waiving state-mandated benefits have also produced only modest employer responses. Ultimately, small business market reforms may do little to make health insurance more affordable because they do not address the underlying growth in health costs. Advanced medical technology, the cost of uncompensated care to hospitals, medical malpractice insurance costs, and consumer trends in buying medical services are among the major factors driving the costs of health care. GAO summarized this report in testimony before Congress; see: Access to Health Insurance: States Attempt to Correct Problems in Small Business Health Insurance Market, by Mark V. Nadel, Associate Director for National and Public Health Issues, before the Subcommittee on Health and the Environment, House Committee on Energy and Commerce. GAO/T-HRD-92-30, May 14, 1992 (seven pages).
