Health insurance costs are "increasingly rattling" start-up companies and, in some cases, keeping "would-be entrepreneurs on the sidelines, especially those with pre-existing medical conditions," the New York Times reports. The "high cost of health insurance" is "even more critical" for entrepreneurs with ventures that are fewer than five years old, as they are in the critical stages of building clientele and profits, according to the Times. In addition, many start-ups have few employees, and the companies cannot receive the discounted insurance rates that larger companies have. A September Kaiser Family Foundation and Health Research and Educational Trust telephone survey of 2,122 companies found that premiums for small companies increased by 8.8% on average, compared with a 7% increase among larger companies with 200 or more employees. According to a 2005 National Association of the Self Employed mail survey of more than 600 small businesses, 51.1% of small-business owners said they did not offer, or plan to offer, health insurance coverage for themselves or their employees. The NASE survey found that 14% of the smallest companies grossing less than $50,000 annually offered health insurance, compared with 70% of companies with annual revenue of at least $500,000. Smaller companies that offered health insurance to workers spent a median 18.7% of their gross sales on health coverage, compared with 2.3% among higher-grossing firms. Kristie Darien, executive director for NASE, said, "The cost of health insurance is definitely a big factor in the decision to move toward self-employment," adding, "Not only is it a huge cost, but it's also very complicated. There's a natural fear among people that you have to do a lot of research and it still can be very confusing." According to Katherine Swartz, an economist at the Harvard School of Public Health, many states are examining ways to reduce health insurance costs for small businesses, such as through high-risk pools that provide subsidized insurance to individuals with pre-existing or chronic conditions (Tahmincioglu, New York Times, 11/30).

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