Small business is the working poor of American industry when it comes to health insurance access: they simply cannot afford to pay for it.

This means that workers in small businesses — which is where most new jobs are created — probably won’t have access to health insurance at work.

Workers who don’t receive health coverage from employers are unlikely to get coverage on the individual market or from any other source, according to Insurance at Risk: Small Business Employees Risk Losing Coverage.

This report was compiled by a team from the Department of Health and Human Services (DHHS), synthesizing statistics on small business and health insurance coverage between 2000 and 2009.

Three in 4 small businesses that do not offer benefits point to the high cost of premiums as the #1 cause for not offering health insurance at the workplace. The percentage of small businesses offering health insurance dropped from 57% to 46%. Thus, fewer than 1 in 2 small businesses offer health care to employees.

If it’s the costs that prevent small businesses from getting into health coverage, why do small businesses face higher health insurance costs than larger companies? First, their relative burden of health plan costs is greater: small biz pays as much as 18% more than big firms for the same policy due to higher broker fees and administrative costs. Administrative costs can be as much as 3 to 4 times greater for small groups than for large groups.

Health Populi’s Hot Points: While geography is destiny in health care when it comes to variability in the quality of clinical services, employer size is a determining variable for worker’s health coverage. The larger the firm, the more likely health insurance is offered, and offered at a cost that is more manageable than in a small business.

Employees of small business are 50% more likely to lose coverage as a worker in a large business, this report found.

If employers are to continue to be the cornerstone of health insurance financing in the U.S., then health reform must provide small businesses the wherewithal to play this role in a meaningful way. Tax credits and enhanced local competition to keep plan premiums competitive and increase options for businesses of all sizes will translate into a stronger foundation for health coverage nationally.