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| In Focus: Meeting the Bottom Line |
By: HealthBond - Anne Marie Talbott, MA, MBA
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In today's booming economy, many small business owners are trying to balance budgets and benefits. This week's edition of In Focus looks at the issues facing small business owners as healthcare consumers. The healthcare industry has traditionally looked more at the larger corporate entities as their primary consumers, but small business owners and their employees are a very important economic force in the United States today.
The question is: how can the healthcare industry work with small business owners to provide affordable and high quality health insurance to workers? We'll explore this from two viewpoints: national and local perspectives.
In General: An Overview of Small Business and Health Insurance Coverage Today
In today's work environment, employees expect benefits to include health insurance. As employment figures continue to rise, employers are being hard-pressed to find ways to afford quality healthcare coverage that suits employee's needs. "Employees and prospective hires view health insurance as a valuable and integral part of an employer’s total benefits package. Health insurance benefits were identified as the most important employment-based benefit by 64 percent of respondents, according to a recent poll of 1,000 working adults by the Employee Benefit Research Institute in Washington, D.C., and The Gallup Organization in Princeton, New Jersey," according to Susan J. Wells. Breaking the Bad News. S. Wells April 2000 v.45, n.4. www.shrm.org
Costs continue to be a major factor for small business owners. Not only do employees expect healthcare benefits, they expect affordable ones. The small business owner, as a healthcare consumer, has to balance budgetary needs with staffing needs, and finding affordable, quality health insurance for their employees is becoming a major problem for many entrepreneurs.
"A 1999 survey of 600 companies…pegs this year's health care cost increase at between 8 and 10%. This projected hike follows an increase of 7.8% in 1999--the highest increase recorded…since the early 1990s," comments Susan Wells, in a recent article in Human Resources magazine. "On average, health care plan costs will rise from $4,412 per employee in 1999 to $4,853 this year." Avoiding the health care squeeze: rising costs are forcing HR professionals to get more from their health care dollars. S. Wells, April 2000, v. 45, n. 4.
www.shrm.org
"For the fourth year in a row, the cost of health insurance tops a survey of problems facing Georgia's small-business owners. The 1998 survey questioned 308 business owners, many of whom ranked health costs above finding qualified employees and workers’ compensation cost. The results mirror the findings of the organization’s national surveys. Three out of four survey respondents provide health care coverage for their employees, with most monthly premiums ranging from $100 to $200 per employee. About 80 percent of the firms that provide health insurance use managed care plans. In 1991, only 2 percent offered managed care."(Small business owners say health insurance costs No. 1 problem. (AP). www.onlineathens.com This report, from Associated Press, shows how national trends translate down into regional trends. The increase in managed care plans is an on-going phenomenon, worthy of healthcare providers' attention.
The government has noticed, too. "Secretary of Labor Alexis M. Herman…(has) launched a national health benefits education campaign designed to help millions of working Americans understand their medical benefits when they experience changes in life and work - such as marriage, childbirth, job layoff or retirement. 'Many of us know more about the TV show "ER" than we do about our health insurance plans,' Secretary Herman said. 'Your health insurance needs change throughout your life. You want the benefits to be there when you need them.' " Know Your Health Plan. [12/16/1998] www.dol.gov
In an effort to bridge gaps between private and public needs, the Department of Labor has developed plans to educate both workers and employers about health insurance. The Department of Labor has enlisted the support of over 70 public and private organizations, the Secretary noted, and they have joined with the Department of Labor to "help distribute new brochures to advise workers and spouses covered by employer-sponsored health plans. 'More than 120 million workers and family members are in private-sector health plans,' Herman said. 'We hope to reach as many of them as possible as well as their employers.'" Know Your Health Plan. [12/16/1998] www.dol.gov
As outreach and education efforts increase, hopefully we'll see a decrease in the level of difficulty that small business owners have to deal with when looking for benefits to meet their employees' needs. As the data above shows, the workforce's health insurance coverage is a large portion of the total healthcare insurance field. In order to meet worker's needs, in a dynamic economy, small business owners are being faced with problems that need creative solutions. The healthcare industry as a whole can benefit from the education and outreach programs sponsored by public, private and governmental sources, making consumers on several levels--small business owners as well as employees--more aware of their healthcare insurance options.
Specifics: In Focus Interviews Nashville Small Business Owner
One of the issues facing small business owners is that their insurance is often seen as too difficult to understand or explain to their employees. Recently, we asked a businesswoman in Nashville, Tennessee, Lynn Odum, what she thought about this perception. She noted that wording seems to be vague in some insurance brochures, especially when dealing with coverage issues. Maybe formatting is the problem: "Perhaps a chart would be a better idea, listing plans and coverage for quick view with the specific items covered," Ms. Odum noted. Internet insurance sites for the small business owner are also in need of design assistance: "I’ve tried to access our ins. company’s site with little success…too much jargon and unnecessary verbiage!"
When asked if she thought the average healthcare consumer is willing to make cost-cuts now in order to get better service in the long run, Ms. Odum replied, "No. It would be difficult for most people to trust an insurance company for delayed gratification. I think that insurance companies have such a poor reputation right now that most people would believe that they were only trying to benefit themselves with the cost cutting, not working for the consumer."
Ms. Odum noted that having a third party to help process or interpret insurance claims would be a good idea: "I think it would be very helpful to have a non-partial company help with the billing. Fear and mistrust of insurance companies and healthcare providers is so prevalent that having an outside company would be beneficial." Small business owners have felt caught between a rock and a hard place in the struggle to both meet the bottom line and to provide for their employees' needs. Distrust and worry about the health insurance business as a whole has resulted. Perhaps the intervention or mediation of a third party to work with both the insurance companies and the business owners would facilitate the process as a whole.
Should private insurance packages include preventative as well as the more usual healthcare coverage? What about coverage for chiropractic/massage visits? Should that be included in a regular package or not? Ms. Odum had definite opinions about this: "It’s obvious that preventative measures should be included in healthcare in order to decrease costs down the road. Our group plan does cover chiropractic/therapeutic massage and we do take advantage of it. As stress becomes a constant fixture in our lives, the management of it should become a part of our coverage. It seems to me that healthcare should be tailoring the preventative maintenance to the individual consumers. I would rather be categorized and rewarded for the changes that I make. Our current insurance doesn’t take into consideration the efforts that I make to save them money and improve my health."
Including the consumer's efforts toward maintaining a healthy lifestyle would help insurance companies as well as small business owners. Employees would be healthier, more satisfied, and insurance claims would probably drop. Several large companies include wellness in their employee benefits, and it seems reasonable to expect smaller businesses to do the same. Why can't they? It's sometimes hard to afford the effort, from a short-term perspective. Long-term benefits and cost savings are sacrificed in the day-to-day struggle to maintain a competitive edge.
What do small business owners think about employers giving medical savings accounts instead of full coverage? Ms. Odum's answer: "I think that most people’s fear of serious accident/injury would probably steer them away from a medical savings account. It’s just too critical an issue to gamble that you wouldn’t have the buildup in the account by the time of the need."
As a small business owner, Lynn Odum was asked, "Do you think consumers can make all the best decisions about healthcare insurance? What do you think the insurance payer (company) thinks about this? Do they think differently?" She noted that, "No, I don’t think consumers make the best decisions because they are so ill informed. I personally feel at a loss when comparing coverage and companies when I’m making a decision about which is best. Judging from my experience with them, I feel that the insurance payers feel superior and have the final say. I don’t really think they care what the consumer thinks."
When asked what role the Internet played in her search for information about healthcare insurance, Ms. Odum replied, "I’ve tried to access our insurance company’s site with little success. Once again, too much jargon and unnecessary verbiage!" She noted that most of her information came from the company's representative, not the Internet. This is one area that could certainly use a lot of improvement. The Internet is designed as an information conduit, and insurance companies, as well as other healthcare industries, should take full advantage of that. Providing information on a small business' coverage, having links to wellness sites, and being more accessible in general would definitely increase the amount of educational information flowing between healthcare insurance provider and enrollees. This, of course, would make the small business owner's life a little easier, too.
Conclusions
Where do we go from here? As healthcare professionals, the door is certainly open for improvement on service delivery and explanation of benefits, as well as developing more of a preventative viewpoint in general. The Internet, as the much-touted "information superhighway", definitely has a large role to play in the future, as more and more consumers and businesses become linked to the web.
The healthcare provider has a role to play, too, since the amount of education about benefits is closely related to utilization of services. Better-informed patients are probably healthier patients. As consumers themselves, healthcare providers have a vested interest in how well small businesses deal with the challenge of finding affordable and high quality health insurance for their employees, too.
Making health insurance more affordable is a difficult task. In an article about health care legislation and small businesses, Bennie Thayer, president of a national association for the self-employed, noted that "…probably the single quickest way to make health insurance more affordable for the self-employed would be to increase the income tax deduction for it. Last year, the NASE and other small business groups helped push the deduction that the self-employed may claim for their health insurance up from 25% to 30%. Efforts are well underway to further increase it to 50%. But this is still a long way from the 100% deduction for health insurance costs that most larger businesses are allowed to claim." Health Care Legislation and Small Business. Bennie Thayer. www.tsbj.com
"As costs go up, there is a crucial need for employers to provide employees with more information on costs and outcomes," says Tom Beauregard, a principal at Hewitt Associates. "That's the big challenge before employers today." Breaking the Bad News. S. Wells April 2000 v.45, n.4. www.shrm.org
There are ways to communicate to your employees, Susan Wells notes, in an on-line article from Human Resources Magazine.
Ways To Communicate About Health Insurance Benefits to Your Employees
Use research-based communication. |
Find out which parts of the plan your employees use the most. |
Find out which parts of the plan your employees value the most. |
Be sensitive to what employees are looking for in terms of their individual needs. |
Consider allowing employees to vote on which aspect of a plan to drop, if that's necessary. |
Create a pattern of education. |
Keep employees informed about health care cost surveys. |
Keep employees informed about quality rankings of insurers and providers. |
Put your company's position as a consumer and purchaser in perspective for employees. |
Breaking the Bad News. S. Wells April 2000 v.45, n.4. www.shrm.org
If insurance companies can focus more on emphasizing wellness choices, and education for the small business owner and his or her employees, they can have a measurable impact on the wellness of American workers and business owners. Working together to increase access to information and alternatives to traditional health insurance benefits will benefit everyone.
Anne Marie Talbott, atalbott@healthbond.com
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Member Opinions:
By: Terin on 5/9/00
How often we forget about the small business owner, one of the building blocks of our economy. My spouse is a small business owner and it has been a real headache trying to find adequate (not even good) coverage that we can afford. Even as a healthcare professional, making the decision was not easy. I can't imagine what it would be like for someone not in healthcare.
By: tammy on 5/9/00
We very much need to decrease some of the complexities that consumers have to wade through. Understanding health insurance is one of them. I think we have made this so difficult it is almost like doing one's taxes. Who knows - lets get some one else to do it - attitude. Yet, insurance touches very close to home when we need it. Needs to be easy to understand. Consumer friendly. and Cost-effective. We will get there. Nice article, Anne. Small businesses represent 50-55% of the GDP - we need to listen and understand their needs.
By: smchugh on 5/10/00
Nice article, and very much on point . I would make a couple of observations that seem to be generally overlooked . No small part of the 'complexity ' in the contract language is dictated by our friends in the legislature and their regulatory authorities in their zeal to " protect " the public from insurors . They too seem to share the view that the insurance carriers are not to be trusted . This has proven to be a very couterproductive attitude , at best. Secondly , state mandated coverages have increase the cost of health insurance plans to everyone while offering little value to the insuring public at large. No small part of this seems to be attributable to the herculean efforts of a number of influential private interest groups ... healthcare providers not excluded . Do we need more individual responsibility for health and the associated cost of care...you bet . But , once again , special interests have influenced the regulatory authorities to block efforts of the employer to hold their employees accountable for conditions that the individual could , in fact , impact very favorably. We all have a lot of work to do in this arean . And it is going to require a great deal of integrated thinking and ( cooperation ). Two elements that have been totally lacking in our healthcare strategy todate. Steve McHugh
By: annemarie on 5/10/00
Great comments...integrated thinking and cooperation would be two wonderful facets of a working relationship between consumers and insurance companies, as well as between other members of the healthcare community. But as Ms. Odum pointed out a couple of times in her interview, the trust issue is keeping the very people who need to put their heads together, apart. We have to work on the trust issue--letting people see that there are indeed common issues, and common ground to meet upon. Special interest groups have a tendency to exploit our national fondness for red tape. But then again, special interest groups or not, we as a country have always had a weakness in that area. If you sit still long enough in Washington, you'll be red-taped and legislated before long. As a community, we have to find common ground here, too, and overcome the bureaucratic lethargy that limits our problem-solving capabilities sometimes. Synergy, creativity, trust...not just words. They can be the turning point in the healthcare industry crisis.
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