Healthcare costs makes CEO’s sick.

Small business that do provide insurance to their employees pay up to 18% more per worker than large firms pay for the same insurance according to a report released by White House Council of Economic Advisors in July. This essentially imposes a tax on small businesses and their employees because broker fees and administrative costs are higher than paid by larger businesses. As a result, more small businesses are not offering healthcare to their workers. Employees of small business account for about one-third of the nation’s uninsured. Only 49% of firms with 3 to 9 workers and 78% of firms with 24 workers offered any health insurance in 2008. This compares to 99% of firms with 200 or more employees.
Federal Healthcare proposal attempts to level the playing field.
- Healthcare Exchange: Will allow small business to purchase insurance through an exchange to provide better coverage at lower costs
- Employer contributions to Heath Care Costs: Employers that do not provide or substantially contribute to their employees heathcare will be required to pay a percentage of their payroll as a contribution to a national plan.
- Small Business Exemption: Exempts small business from the requirement to provide health care benefits or contribute to the costs of the national plan.
- Small Business Health Tax Credit: Small business will receive a refundable tax credit of up to 50% on premiums paid by small business on behalf of their employees.
What to do in your business in the next 6 months.
Expect healthcare costs to rise another 10% to 13% next year. For the next 6 months the outcome of federal healthcare legislation will remain largely unknown and what it means to employer costs.
According to Marianne Frazen of the DFW Business Group on Health, “It’s kind of an employer’s market. If they are going to do anything to manage their costs, this is the year to do so. It’s in everyone’s best interest to do so.”
See switch from PPO to Consumer Driven Plans.
Consumer Driven Plan have higher deductibles, usually $1,500. Employees can draw from their health savings accounts or health reimbursement arrangements. Unlike PPOs the balances roll over from year to year. Consumer Driven Plans reduce cost.
Annual physicals and screenings are excluded from higher deductibles, so there is no disincentive for preventive behavior with Consumer Driven Plans. About 40% of mid-size companies currently offer consumer-driven plans. Early signs show an additional 15% to 20% of companies have begun to consider these plans.
Expand Auditing and Wellness programs.
Employers who focus on health management and wellness programs have yielded the biggest returns. More companies are auditing the use of their medical benefits and know approximately 65% of small business. Expect many companies for the first time to add higher premiums for smokers.