Key Findings From A Survey Among Small Business Owners in Kansas Kansas Small Business Survey Key Findings From A Survey Among Small Business Owners in Kansas

Methodology On behalf of the Robert Wood Johnson Foundation and The Sunflower Foundation, Public Opinion Strategies and Lake Research Partners conducted a statewide telephone survey in Kansas among 200 owners, CEOs, and presidents of businesses with 2-50 employees. This survey was conducted August 22 – September 5, 2008. On behalf of the Robert Wood Johnson Foundation, in May/July 2008, the research team conducted: 10 triad qualitative discussion groups among small business owners with 2-50 employees and a national telephone survey among 400 small business owners, CEOs, and presidents of businesses with 2-50 employees that pay for at least some portion of their employees’ health insurance benefits. This presentation will highlight the key findings from the Kansas survey as well as highlighting some comparisons to the triads and the national survey data.

Methodology The table below shows the breakdown of businesses with 2-50 employees in Kansas compared to nationally: Small Businesses # Of Businesses National % Of Total National Kansas % Of Total Kansas 2-50 Employees 5,121,027 57,381 2-9 Employees 3,994,401 78% 46,767 82% 10-24 Employees 819,364 16% 7,512 13% 25-50 Employees 307,262 6% 3,102 5% The surveys were designed to reflect the proportion of small businesses in Kansas and nationally by company size. We conducted 38 additional interviews in Kansas among companies with 25-50 employees and 295 interviews nationally among companies with 10-50 employees in order to have a statistically significant number of cases to make observations about these audiences.

Small Business Profile Comparing Kansas to the National Average National Kansas Gender: Men/Women 76%/24% 73%/27% Age 18-44 18% 14% Age 45-54 35% 31% Age 55-64 36% 41% Age 65 and over 10% Member of the Chamber of Commerce and/or the National Federation of Independent Businesses 49% 56%

Small Business Profile Comparing Kansas to the National Average National Kansas Provides and pays at least some portion of health insurance benefits for coverage of full-time employees 100%* 60% Percent of businesses who do not currently offer coverage who did previously N/A 31% Percent of health insurance premiums paid for by employees 17% 20% Percent of company’s health care costs increase from last year to this year 14% 13% Feelings about own business’ financial future: Confident/Not Confident 84%/14% 82%/16% *The National Survey was conducted only among small business owners who pay at least some portion of health insurance benefits for coverage of full-time employees.

Small Business Profile Kansas Small Business Owners There is a significant difference in whether or not Kansas small business owners offer coverage by company size.

The National Environment for Small Business Owners:

The Context: Small business owners are facing health care costs rising at an unpredictable rate; They are worried about the issue in terms of their families and businesses; They connect offering health care benefits to retaining quality employees particularly among those companies who offer coverage now; and, They see a role for government in addressing the issue but do not like mandates.

On an open-ended survey question nationally, the issues facing businesses were very similar across each small business segment surveyed. Health care and energy costs dominate as a primary concern for business owners. What would you say are the one or two most important issues facing your business today? Categories Of Topics Mentioned Number Of Mentions Health care costs 78 Fuel/Energy costs 70 Weak economy 55 Cash flow/Sales 28 Higher prices across the board 24 Finding/Retaining good employees 20 Taxes 19 Housing downturn 18 Government regulation 18 Insurance problems/costs 16 Increased cost of raw materials 15 Finding new customers/business 12 Low consumer confidence 11 Higher food prices 7 Competition, particularly foreign competition 6 Government inaction/incompetency 5 Inflation 5 Layoffs 3 Difficulty getting loans 2

Small Business Owners In Kansas:

Kansas small business owners who currently offer coverage are less likely than their national counterparts to say they would consider no longer providing or paying at least some portion of health insurance benefits for their employees.

Likelihood Companies Will No Longer Assist With Health Care Coverage – Among Companies Who Currently Offer Coverage 36% 27% 62% 60% 73% Core 2-9 Employees 10-24 25-50 -26% -24% -46% National 28% 35% 12% 66% 65% 63% 88% Core 2-9 Employees 10-24 25-50 Likely Not Likely -38% -37% -28% -76% Kansas Slide 12

Small business owners in Kansas who do not currently offer coverage are more likely to say it would help their business if health care legislation was passed. Perceived Impact Of Health Care Legislation To Help Small Businesses-Kansas 34% 42% 38% 33% 13% 14% Among Business Who Currently Offer Coverage Among Businesses Who Currently Do Not Offer Coverage -4% +9% Help Hurt No Impact Slide 13

In Kansas the top supported policy options we tested are: Creating a small business tax credit Making health care coverage portable Passing medical liability reform Promoting a government sponsored pool for small businesses

Most Helpful Ideas - Kansas Create a new small business tax credit to make it easier for small businesses to create and offer jobs with health coverage. The government would provide a refundable income tax credit to employers who currently pay at least fifty percent of the cost of group health insurance for their employees. Total Help Total Hurt Net Difference 71% 5% +66% 70% 6% +64% Make health insurance portable so that individuals and families keep their coverage even when they change jobs or employers. Pass medical liability reform to eliminate lawsuits against doctors who have followed the correct clinical guidelines and have followed the right safety standards in patient care. 66% +61% 5% Promote a government-sponsored pool for small businesses that would allow them to purchase insurance at negotiated rates that take advantage of bulk purchasing power. +52% 66% 14%

Second Tier - Most Helpful Ideas - Kansas Total Help Total Hurt Net Difference Expand and encourage the use of health savings accounts - that is a tax-free medical savings account coupled with a high-deductible health insurance plan. The money consumers put into these Health Savings Accounts would roll over year to year to help build a source of funds that can only be used to cover out- of-pocket health care expenses. +47% 58% 11% Require by law that all insurers can not deny coverage, including for pre-existing conditions, refuse renewal of coverage, unfairly charge for coverage, or force those they cover to pay excessive premiums for age, illness, or other discriminating factors. 51% 21% +30%

Less Helpful Ideas - Kansas Total Help Total Hurt Net Difference Allow trade or professional organizations, churches, and unions to offer health insurance plans to their members around the country. 43% 7% +36% Eliminate the current tax credit employers receive for providing health coverage to their employees and instead provide all Americans with a tax credit to select and buy their own health insurance. This individual tax credit would reduce Americans’ taxes by two thousand five hundred dollars for singles and five thousand dollars for families. 47% 19% +28% Repeal the tax cuts that have been enacted over the past few years for Americans who make over two hundred and fifty thousand dollars a year in order to help employers be able to offer health coverage to their employees. 32% 29% +3% Guarantee all Americans a choice of health plans, either from a private insurer, or from a new public government plan offered at a sliding scale cost based on income. Employers would be required to offer a choice of the public plan and at least one private plan to all employees and small businesses would receive discounts based on a sliding scale. 41% 39% +2%

The One Statement Where A Majority Of Respondents Say This Will Hurt A majority of respondents in Kansas say an employer mandate would hurt their small business. The One Statement Where A Majority Of Respondents Say This Will Hurt Net Difference Require employers who have ten or more employees who today do not provide health coverage to their employees to NOW pay four percent of their payroll to help cover the uninsured. 20% 40% -20% Help Hurt National Net Difference Require employers who have ten or more employees who today do not provide health coverage to their employees to NOW pay four percent of their payroll to help cover the uninsured. 13% 56% -43% Help Hurt Kansas

Ideas Most Important To Focus On First - Kansas On an open-ended survey question, only five of the proposals received a double-digit mention as the one or two proposals that would help their businesses the most in Kansas. Ideas Most Important To Focus On First - Kansas Kansas Core 2-9 Employees 10-24 Employees 25-50 Employees Create a new small business tax credit 22% 23% 23% 12% 12% 13% 7% 7% Make health insurance portable Promote a government-sponsored pool for small businesses 12% 12% 13% 13% Provide all Americans with a tax credit to select and buy their own health insurance 11% 11% 10% 7% Expand & encourage health savings accounts 10% 10% 9% 15%

After testing each idea individually, we created policy bundles to combine different policy ideas into three different policy approaches. Support is higher for a more market based reform approach or a government sponsored pool/tax credit reform approach.

OPTION 1: Market Based Reform Approach Would provide all Americans with a tax credit to select and buy their own private health insurance that they could keep and take with them between jobs. This would eliminate the current tax credit employers receive for providing health insurance to their employees. It would expand and encourage the use of tax-free health savings accounts to cover out-of-pocket health care expenses, while allowing organizations, churches, and unions to offer health insurance plans to their members around the country. Medical liability reform would be passed to eliminate lawsuits against doctors who have followed correct guidelines and safety standards in patient care. +40% +38% 68% 68% 30% 28% Strongly Favor 26% Strongly Oppose 13% Strongly Favor 23% Strongly Oppose 15% National Kansas Favor Oppose

OPTION 2: Government Sponsored Pools And Tax Credits Approach With the four percent employer mandate proposal… 53% 61% 45% 39% National Kansas Favor Oppose +8% +22% Would promote a government-sponsored pool for small businesses to purchase insurance at bulk purchasing rates. Small businesses would get a new tax credit to make it easier to offer health coverage if they pay at least fifty percent of the cost of employee health insurance. This proposal would require employers with ten or more employees who today do not provide health coverage to pay four percent of their payroll to help cover the uninsured. Strongly Favor 23% Strongly Oppose 25% Strongly Favor 15% Strongly Oppose 23% Without the four percent employer mandate proposal… +58% +32% 78% Would promote a government-sponsored pool for small businesses to purchase insurance at bulk purchasing rates. Small businesses would get a new tax credit to make it easier to offer health coverage if they pay at least fifty percent of the cost of employee health insurance. 66% Strongly Favor 37% Strongly Oppose 12% 34% 20% Strongly Favor 32% Strongly Oppose 21% National Kansas Favor Oppose

OPTION 3: Guaranteed Government Approach Would guarantee all Americans a choice of public or private health plans that they could keep and take with them between jobs. Employers would be required to offer a choice of the public plan and at least one private plan. Insurance companies would not be allowed to deny people coverage due to age or pre-existing conditions. This proposal would be paid for by repealing the tax cuts enacted over the past few years for Americans making more than two-hundred and fifty-thousand dollars. 53% 50% 44% 48% National Kansas Favor Oppose +9% +2% Strongly Favor 26% Strongly Oppose 33% Strongly Favor 22% Strongly Oppose 35% .

The Robert Wood Johnson Foundation & The Sunflower Foundation Turning Questions into Answers www.lakeresearch.com ● 202-776-9066 www.pos.org ● 703-836-7655