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This is the choice more and more small businesses are facing

According to a recent survey by the National Small Business Association, about 10% of small businesses are eliminating health insurance coverage over the next year. It’s either health insurance or jobs.

This isn’t the first decline in health insurance coverage over the past year. Only 38% of small businesses are providing health insurance coverage, down from 61% in 1993. About 19% of small businesses are planning on stopping coverage within the next 5 years.

Sheryl Weldon, owner of Texas-based Commerce Welding & Manufacturing Co. dropped coverage in December after seeing health insurance premiums for her employees increase by more than $600 a month in the last five years. Five years ago, Weldon was paying $200 per employee per month and this year premiums skyrocketed to more than $800. Premiums typically increase 8% to 16% a year for small businesses.

Kelly Reeves, president of KLR Communications, canceled health insurance for her three employees. Reeves said she had to choose between cancelling health insurance coverage and laying off an employee after losing a client that accounted for 50% of revenue.

Due to small businesses canceling health insurance coverage, more and more people are becoming uninsured. According to a report released by Families USA this year, approximately 86.7 million Americans were uninsured between 2007 and 2008. The report also found that nearly 75% of those uninsured were without health insurance for at least 6 months and almost two-thirds were uninsured for more than 9 months.

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