According to the U.S. Small Business
Administration’s Office of Advocacy,
there were 26.8 million businesses in the United States in 2006. Of this number,
99.9 percent were firms with fewer than 500
employees.
While small businesses have demonstrated tremendous growth over the last 10
years, small-business owners are still challenged by one issue — health insurance.
A recent National Federation of Independent Business membership survey shows
that the cost and availability of health insurance are the top issues for small businesses.
Research also shows that insurers of small
health plans have higher administrative
expenses than those that insure larger
group plans. Additionally, employees at
small firms are less likely to have coverage
than the employees of larger entities.
“Every business, regardless of size, is concerned about the rising cost of health care,”
says Bill Berenson, senior vice president of
Aetna’s Small and Middle Market Business
for the North Central Region. “Large businesses are better positioned to handle these
increases; most small businesses are not. As
insurers, we need to understand the demands of running a successful small business and work with owners to establish innovative, realistic and practical ways to provide quality coverage at affordable prices.”
Smart Business spoke with Berenson to
learn more about the unique health benefits
needs of small businesses and what insurers
are doing to meet these needs.
What are some of the challenges that small
businesses face in terms of health insurance?
Small-business owners are first and foremost concerned about affordability. As a
result, they often seek out insurers who can
provide them with the best price. Their need
to control costs is countered by their desire
to provide employees with simple and easy-to-understand options. Since most small
businesses do not have human resource
departments to explain the benefits,
employees also need access to resources
and tools to help engage them in the health
care process.
What are insurers doing to meet these
needs?
The rising cost of premiums has prompted
some small businesses to reduce benefits or
even drop coverage entirely. To help these
owners afford health insurance and continue to offer benefits to employees, insurers
have created innovative solutions that
increase flexibility, control and choice for
the employer and the employee.
Consumer-directed health plans (CDHPs)
are high-deductible plans, usually accompanied by either an HSA or HRA. The HSA or
HRA allows employees to set aside tax-deferred money for medical expenses.
CDHPs encourage employees to become
more involved in their own health care decisions and to exercise greater control over
how and when their health care dollars
are used.
CDHPs allow employers to have more
control over their dollars too. Our research
shows that employers who offered a CDHP
lowered their health care trend and saved
money throughout the life of the plan.
What role does value play in the price discussion?
Small businesses are lean organizations, so
the health and wellness of their work force
can have a significant impact on their bottom line. In response, a number of insurers
have started offering value-added programs
and services to small businesses to help
improve employee health and productivity.
One example of a value-added offering is
wellness. Previously only available to large-account customers, many insurers have
started offering wellness programs and
incentives to small businesses to raise the
level of engagement for healthier, more productive work forces. Some insurers have
taken this concept one step further by offering employee assistance programs, which
help employees balance work, home and
personal life through a wide range of support services.
What are some other ways insurers are
working to address the needs of small businesses?
Small businesses are more susceptible to
turnover, which can make enrollment
changes and benefits administration difficult and time-consuming. As a result, a
select number of insurers have developed
self-service, Web-based tools to improve the
ease of doing business for brokers, customers and members. These tools provide
online access to member eligibility information for medical, dental, pharmacy and life
and disability coverage. The tools give customers the ability to expedite online member additions, terminations, life event
changes and selection of benefits.
In addition, these solutions improve the
accuracy of benefits selection, increase the
speed with which benefits changes are
made, eliminate the number of pending
member enrollments [because of incomplete information] and increase the delivery
speed of member ID cards.
BILL BERENSON is senior vice president of Aetna’s Small and Middle Market Business for the North Central Region. Reach him at
(312) 928-3323 or [email protected].