Insights from Wellthie
By Sally Poblete
It’s no secret that small business owners care about their employees — they are like family. Making sure employees stay healthy is a priority for most business owners. One important way to promote employees’ health is to provide health insurance, but many small business owners may think doing so is out of reach for them due to the cost and complexity.
Small business owners do have a unique set of pain points in offering health insurance, including costs and administrative tasks. Here are several reasons why providing health insurance is important for small businesses, despite the challenges.
Why is offering coverage important?
Small business owners want to provide health insurance to employees. In fact, 40% of small business owners consider it a moral responsibility to offer coverage. Many of them are concerned that employees would not otherwise be able to afford a health insurance plan.
Moreover, offering health insurance is an effective way to attract and retain talent. Health benefits continue to be a main reason that employees choose a particular job, and 60% of employees say that they would stay at their job if they were happy with the benefits provided. Small businesses especially have limited time and resources, so incentivizing the right candidates is an effective business strategy to maintain profit margins and reduce turnover.
In addition, providing health insurance means that employees will have better access to healthcare resources allowing them to take advantage of different types of care to stay healthy. Employees who are healthy are also more productive, which is better for everyone in the workplace.
Costs are often a barrier, but there are ways to mitigate them
Nearly 80% of small business owners worry about the cost of providing health insurance to employees. According to 62% of them, a premium increase of 15% or more would make group coverage unaffordable. However, there are a number of ways small businesses can keep costs down.
Business owners can use online marketplaces to compare prices and benefits of different plans side-by-side. There are a breadth of choices available, including bronze, silver, gold and platinum plans, which all differ in terms of out of pocket costs, as well as their monthly premium. Exploring various networks of providers covered by a plan can result in lower price points. In addition, business owners can decide how much they want to contribute to employees’ monthly premiums depending on what is right for their business. Typically, this ranges from covering the total cost to covering half of the cost.
Small business owners should also keep in mind the tax advantages they would receive by offering health insurance. Employer contributions to premiums are tax deductible, and employee contributions are made pre-tax, lowering a small business’ payroll taxes. Small businesses with fewer than 25 employees may also qualify for tax credits if the average annual income of employees is under $53,000.
Providing health insurance is an important step small businesses can take to not only attract and retain employees, but to make sure they stay healthy. While many small business owners may think they can’t afford health insurance, it is worth investigating creative solutions. There are great ways for small businesses to offer health benefits and take care of their most important asset — their employees.
By Sally Poblete
The Millennial generation – which generally refers to individuals born between 1980-1996 – continues to fascinate businesses. Millennials are now the biggest cohort in the workforce and are opening the majority of small businesses. That means they hold a lot of power, both through the products and services they purchase and by way of social influence. Companies are motivated to understand Millennials and win them over.
That is not an easy task, considering Millennials show high levels of distrust in major institutions and most businesses. The health insurance industry, which struggles with public opinion more broadly, has a long way to go in terms of gaining Millennials’ business and trust. Below are three factors they should consider to convince Millennial decision-makers that health insurance is an important purchase.
Costs are a bigger concern than for other generations
Millennials are more concerned with costs than other generations. Many young adults are saddled with student loan debts while at the same time, salaries have largely stagnated and costs of living continue to increase. Millennial business owners understand these struggles because many of them have experienced them personally. Many Millennials would rather go without health insurance than enroll in an unaffordable plan, especially since they are often relatively healthy and may not see an immediate need for healthcare services.
In order to convince Millennial business owners that health insurance makes sense for them, health insurers will have to prove their value. Insurers need to persuade Millennial business owners of the short-term and long-term benefits. They should create targeted, relatable ads that emphasize coverage of preventive services, which can reduce costly health care services down the road. Millennials treat health and wellness as a daily, active pursuit, so this message may resonate well with them. Small businesses should also view health benefits as an appealing incentive in order to attract and retain Millennial talent.
Transparency is crucial for Millennials
While costs are important, Millennials also place a high value on other brand characteristics like transparency. Considering the high levels of distrust among this generation, it makes sense that Millennials want clear and honest information.
In a dense and complicated industry like health insurance, companies can benefit from making information as simple as possible. It is especially important to be clear about pricing structure so that potential customers can quickly understand what plan benefits include and don’t include. Insurance providers should also utilize social media and other channels to communicate with Millennials and make it clear that they care about members. According to Ambassador, 71% of consumers are more likely to recommend a brand after having a positive experience with them on social media.
They prefer digital experiences
Millennials grew up with technology and are comfortable using the Internet and their smartphones for all sorts of things, from banking to shopping. Taking care of their health is no exception – Millennials are more likely to engage with insurers digitally and use telehealth services than older age groups. Millennials are coming to expect these capabilities, and some companies are doing better than others. For example, Millennials’ retail expectations are based on the ones they have with Amazon, Spotify, Airbnb, and others.
Insurers who focus on providing more streamlined digital services, like e-commerce marketplaces, online portals, and subscriptions to mobile health solutions, will be in a better position to win over Millennial consumers.
To appeal to more Millennials, health insurers will have to adapt their business strategies to prove their value, increase transparency, and provide more digital offerings. Millennials are skeptical and cost-conscious, but they also care about their health a great deal. By meeting or exceeding Millennials’ expectations, companies can gain loyal customers and increase the number of Millennials who are insured.
In this interview, we sat down with Wellthie advisor Jimmy Lee to hear his thoughts on where the small group insurance market is heading. Jimmy is a dynamic healthcare visionary with extensive experience as a leader of several of Anthem’s multi-billion dollar divisions. He is currently a healthcare executive as CEO of SimpLee Healthcare, executive consultant with Sharecare, Advisory Boards of Wellthie and Solera Health, Board member and Treasurer of Easter Seals, and consultant for Pareto Intelligence and Leverage Health. Jimmy is the former President of the Small Group and Individual segments at Anthem, Inc, one of the nation’s largest health insurance companies.
What are the opportunities ahead for carriers to generate feasible growth in the small group market?
There is going to be a period of expanded options for small employers in terms of benefit offerings. Since ACA provisions went into effect in 2014, there have been strict regulations defining essential benefit offerings, community rating, rating relationships between metal products, elimination of industry and group size rating factors, and age rating restrictions. With those regulations loosening, we will see more variation in the types of plans available. For example, the recently announced rule to expand Association Health Plans may result in some lower rates on the market, though this will likely vary by state. There is also an opportunity for growth in ancillary offerings, wellness programs, and critical illness/accident coverage.
Some states may be more restrictive than others in terms of how much variation they allow. However, carriers can offer both ACA-type plans and others as well. Short-term plans also present an obstacle because they can be extended to 12 months, which means we may see more individuals opting out of individual/small group ACA plans. Affordability is also a barrier because there are still small businesses who are unable to offer health plans due to costs. Carriers need to continue thinking about how to lower costs so that they can tap into small businesses who are not able to offer coverage today and thereby increase market size.
What should small group carriers be prioritizing in their growth strategy today?
Small group carriers need to be ready for the idea of increased choice. They should put additional investments into new product offerings, and from a sales and distribution standpoint will need to build new and different relationships. They should also be ready for more small groups choosing self-funded plans, an option that they have traditionally avoided. All of these changes will require a good actuarial understanding of the dynamics of the marketplace in order to arrange an effective product portfolio. Other considerations are the potential proliferation of Association Health Plans and MEWA benefit offerings.
How does the changing regulatory landscape affect small business insurance?
The current administration is not going to encourage or enhance the ACA; if anything, they will only try to dismantle it. However, they do want there to be more choice in terms of benefit offerings. From a broker standpoint, having more options to advise small businesses on will make them more valuable, since more choice will make it harder for small businesses to find the right solution. Business owners will need to rely on someone to give them advice, whether that’s a broker, consultant, navigator, or someone else.
What do you think will be the biggest disruptors in small group insurance in the next two years?
As providers are taking on more risk and different treatments and protocols are introduced, carriers are going to have to adapt in terms of where their value lies. Carriers need much deeper partnerships with providers in order to be successful in value-based models. We are seeing trends towards steerage of consumers to the most efficient providers and places of service based on cost and quality of care. Carriers are figuring out how to write medical policies so that members can get services in more convenient places and to push them towards the highest quality providers, all at the lowest possible costs.
Carriers also need to figure out how to engage members more effectively. They have been trying for years to get people to engage members by providing cost and quality transparency tools on their websites, but engagement is very low. They should be thinking about other ways to promote transparency and increase communication. We are also seeing more coordination of care, and Diabetes Prevention Programs (DPPs) are a prime example. DPPs are certified programs that work on behavior change to prevent people at high risk of developing diabetes. Finally, there is a heavy push towards addressing the social determinants of health. We know that income, housing, food insecurity, transportation, and many other social factors play a significant role in health outcomes. Carriers and providers that are able to target these determinants will best be able to lower costs and improve health outcomes.
What should a digital strategy look like for a carrier in health insurance?
Digital strategies can help carriers address some of the issues I just mentioned. Carriers should focus on developing mobile models that help steer people towards providers with the best results. They can also utilize technology to motivate people to engage in health-promoting behaviors, like getting a screening or exam or making lifestyle changes through involvement in a DPP. One big challenge for carriers is that members have many different engagement points, so those that can figure out how to manage all their care with one platform, integrate Electronic Medical Records with claims data, and identify gaps in care will be ahead of the market.
How is the relationship between InsurTech startups and incumbents evolving?
There is a definite possibility for these relationships to continue growing. InsurTech startups are identifying new ways to respond to issues quicker and cheaper than carriers do now, and these strategies can provide significant value to carriers. There is a specific opportunity around engagement tools that directly link providers and individuals to one another in large group plans. There are also opportunities in concierge tools, population health management, and risk adjustment that would be very useful to carriers.
How can carriers leverage data analytics in health insurance?
Carriers can leverage data analytics around managing existing members to identify the highest risk patients and take steps to improve their health. They should be digging deeper to understand what the gaps in care are for members and what they can do to prevent avoidable hospital visits. Carriers can also utilize data analytics to understand their members’ behaviors; for example, whether they are buying gym memberships or purchasing healthy foods, and prioritize which members to put their resources towards in terms of behavior change. Analytics can also help with benchmarking providers and understanding which ones have more or fewer gaps in care for members. Finally, insurers can use data analytics to gain more insights into how people make decisions about purchasing insurance.
How can carriers market better to millennial business owners?
Carriers first need to better understand millennial business owners as a business segment and figure out how they are different in terms of their needs and wants. For example, they may want more mobile services and personalized offerings than older customers. We also know Millennials are enthusiastic about dental benefits, even if they think they’re healthy enough to go without medical insurance. Once carriers identify these priorities, they should put in resources towards attracting and retaining Millennial consumers.
To learn how Wellthie can help carriers with these challenges, contact us today.