Small group reform and insurance provision by small firms, 1989-1995

Since 1989, states have enacted legislation to dismantle barriers facing small businesses that wish to purchase health insurance. Using data on the insurance offerings of 2,472 small firms (one to 49 employees) observed from 1989 to 1995, we assess whether state reforms encouraged more small firms to sponsor health benefits. We find that small group reforms did not spur uninsured firms to offer insurance. Firms without health insurance say that the high price of coverage is still the major barrier they face to offering a plan. Our findings suggest that the small group reforms within the 1996 Health Insurance Portability and Accountability Act are not likely to have an effect on the small group market. Most states already had implemented measures similar to those found in the act, and not much changed.