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Statistically, 5% of all survey respondents are stupid . . .

It is a well-established fact among statisticians, pollers, and market researchers that somewhere around 5% of all survey responders are, in fact, stupid. I kid you not. I learned that statistic in my first marketing research class, my second marketing research class, four more statistics classes, and a consumer behavior class. That’s seven different professors across three institutions (and dozens of survey professionals I know personally) repeating, as sacred writ, the statistical truth that 5% of all survey responders are just plain dopes.

The reasons are varied. Some respondents have simply never found a use for their higher brain functions, some are being lazy and inattentive while doing the survey, and some (like me) muddy up the answers on purpose. So that 5% dumb and dumber statistic is, well, a movable feast. One day, you, too, might find yourself relegated to the idiot corner because you weren’t really paying attention while filling out the survey.

Which helps explain the bizarre numbers coming from the National Small Business Association survey in which 92% of respondents who currently offer health insurance to their employees (and will continue to do so next year) expect to see their health insurance premiums go up next year, but an astonishing 8%, who haven’t noticed that small business health insurance premiums have gone up by double digits every year for the past ten years, expect no increase whatsoever. When you take into account that a certain percentage of respondents have taken on employees for the first time, that probably leaves us with . . . the 5% dumb-as-a-box-of-hammers pile.

More seriously, however, the average increase expected by survey respondents is a 12% to 13% rise in health insurance premiums for small businesses. That, I believe, is considerably on the low side; I expect small business health insurance premiums to rise at least 20% for the best-positioned small businesses and as much as 35% for the most poorly positioned (most of the rest of us) as insurance companies race to lock in the highest possible premiums in the wake of health insurance reform.

It’s the law of unintended consequences, the law that explains why every time we try to make it harder for people to illegally cross the border with Mexico, that the number of undocumented foreigners in this country goes way up (because it’s too hard to return across the border) and why, when we pass severe restrictions on credit card companies, the interest rates soar into the 20’s and 30’s (to make up for lost revenues and protect the banks from the high-risk borrowers they’ve put on the books).

Who’s going to take the hit?

If you look closely at the NSBA survey numbers, fully 39% of the respondents have payrolls of less than $250,000 and 53% have payrolls of less than $500,000; these folks, unless they belong to associations that negotiate with the insurance companies collectively, should expect premium increases of 26% to 35%. That’s fully half of the respondents in the survey (which explains why, in the survey results, that even though the average was 13%, a substantial number of folks expected premium rates to rise much higher).

11% of survey respondents say they will be dropping employee health insurance in some way (now the survey has been set up to disqualify their answers to the question about insurance premiums going up, but here we have one source of “dumb” in the survey — a respondent could answer the question wrong about dropping coverage and then answer the question about rising costs as “no” because they plan to drop coverage).

You can bet that nearly 100% of those who are dropping health insurance altogether are in that group with less than $250,000 in payroll.

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