Increasing number of employers cite rising costs, tight profit margins as the reason.
The number of small business owners who do not offer healthcare to employees is rising, according to the latest Discover Small Business Watch.
A survey by the Riverwoods, Illinois-based credit card company, conducted among 1,000 small business owners who employ five people or less, found that 85 percent of small business owners say they do not offer health insurance to employees, up from 77 percent a year ago and 74 percent in January 2007.
A third of respondents said the price of insurance has a major impact on their ability to grow their businesses.
"While small business owners are finding ways to stay afloat in this tough economy, eliminating healthcare benefits could be another measure of the cost of that resiliency," Ryan Scully, director of Discover's business credit card program, said in a statement.
Amanda Austin, the senior manager of legislative affairs at the National Federation of Independent Businesses, agreed that owners' difficulty in offering health care is a cash-flow issue, particularly for the smaller businesses surveyed.
"When you look at businesses with 5 or 10 employees, it's much harder, and that's probably due to profit margins," Austin said.
She added that many new businesses are delaying offering health care, as well.
The unstable economy is also a factor. "I do think if they can see a sustainable profit from month to month, they will look to reinstate or begin offering benefits," she said.
While NFIB's own numbers suggest that more employers offer some type of health benefits, for 20 years the organization's problems and priorities report, conducted every four years, has shown that the cost of health insurance is small business owners' most severe problem.
"We have to focus on costs and bringing these costs down," Austin said. "They are very expensive, and that keeps people from taking advantage."