Small business owner, health insurance expert?

By Andrea Hopkins

CINCINNATI (Reuters) - Mike Cavanaugh is an electrician by trade, but once a year he immerses himself in the U.S. health insurance industry in an increasingly futile search for affordable medical coverage for his 25 employees.

"I'm not necessarily qualified to make the best decision for all these employees about the best prescription plan, the best co-pays, but I've got to do it," said Cavanaugh, president of Queen City Electric in Cincinnati.

"Health insurance is my single largest cost in benefits, and costs are rising by a minimum of 15 percent a year ... so I shop around every year."

While much of the focus on America's troubled health care system has focused on the struggle by big business to contain soaring costs, America's 25 million small businesses -- employing 52 percent of America's private-sector workforce -- are far less likely to offer employees any insurance at all.

Only 60 percent of firms with between 3 and 199 employees offer health insurance, down from 68 percent in 2000 and well below the 98 percent coverage offered by large firms, according to the nonprofit Kaiser Family Foundation.

As a result, self-employed and small business owners, their employees and families make up 27 million of the America's 45 million uninsured, making health insurance the most coveted benefit for Americans in the job hunt.

With premiums for family coverage up 87 percent nationally since 2000, employers like Cavanaugh say they have been forced to cut coverage wherever they can.

Five years ago Cavanaugh covered 100 percent of his employees' premiums, but has cut that to 80 percent for single employees and 60 percent for family coverage. That still cost him about $55,000 in 2006. His employees pay the rest.