Small group health plans are more costly to administer than plans for larger businesses, according to a new report issued today by the Office of Advocacy of the U.S. Small Business Administration (SBA).

?This report is one more piece of evidence that small businesses need new options in health care,? said Thomas M. Sullivan, Chief Counsel for Advocacy. ?Small businesses employ over half of the private workforce, yet many of their employees remain underinsured due to the high cost of health care. This report details the high administrative costs of health plans designed for small business. One way to lower these costs would be to spread them across large groups of small employers through Association Health Plans. I urge Congress and the President to work together to make health care affordable for small employers and their employees,? he said.

The new report, ?Study of the Administrative Costs and Actuarial Values
of Small Health Plans? written by Rose Chu and Gordon Trapnell of Actuarial Research Corporation for the Office of Advocacy, examined 19 health care plans in two states. The authors found that administrative expenses for insurers of small group health plans ranged from 33 to 37 percent of claims, versus five to 11 percent of claims for large companies? self-insured plans.

The report also found that sales, underwriting, and operating
expenses were all higher for the small group health plans studied versus plans designed for their big business counterparts.

For more information and a complete copy of the report, visit the
Office of Advocacy website at

Congress created the Office of Advocacy of the U.S. Small Business Administration (SBA) in 1976 as an independent voice for small business within the federal government. Appointed by the President and confirmed by the U.S. Senate, the Chief Counsel for Advocacy directs the office. The Chief Counsel advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers.