Overhead: Health insurance costs highest for small medical practices

May 16, 2008

Health insurance costs everyone more these days, but mom-and-pop businesses feel the greatest pain, according to a newly released study from the RAND Corporation.

Health insurance costs everyone more these days, but mom-and-pop businesses feel the greatest pain, according to a newly released study from the RAND Corporation, a nonprofit research organization. Between 2000 and 2005, firms with fewer than 11 employees, including a great number of doctors' practices, saw a 53 percent increase in their median health-insurance costs relative to payroll. That's compared with a relatively skinny jump of 19 percent for businesses with 11 to 24 staff members. Despite the higher costs for companies of all sizes, there's no evidence that they dropped their coverage. The study's authors say this suggests employers and employees were willing to bite the bullet and pay for healthcare, even if it meant giving up pay raises.