When the price of health plans began to take off several years ago, many small employers didn’t know where to go to find affordable health insurance for their employees. Some businesses found the solution they were looking for at their local chamber of commerce, which had been offering health plans to their members for years. With health care costs rising beyond some businesses’ reach, it made good business sense for chambers to offer health plans in the form of affinity programs.
What’s an Affinity Program?
Affinity programs are business partnerships in which a company (in this case, a third-party health insurer) offers discount rates to the members of a chamber of commerce in an effort to increase revenue for both the chamber and the health insurer. For example, a chamber may contract with an affordable health plan to offer special rates to its members. The reason the chambers get involved, apart from helping to keep their membership happy, is that they receive a small amount of revenue as part of a profit-sharing arrangement. It’s a pretty safe bet that your chamber has done a good job choosing a carrier: Chambers tend to carefully consider the reputation of the insurance company to preserve its own reputation within the community.
Does My Chamber Even Offer an Affinity Program?
Chances are that it does. According to the Association of Chamber of Commerce Executives (ACCE), about 85 percent of chambers of commerce manage affinity programs, and about 42 percent offer health plans as part of the program. The programs appear to be successful, as 30 percent of chambers have been managing these programs for over 10 years, with a substantial proportion involved for 20 years or more. Just under 90 percent of member businesses that get involved in affinity programs have 50 or fewer employees, and half of those have 10 or fewer employees. Small businesses are clearly seeing the value in affinity programs offered by their chambers.
Why Take Advantage of an Affinity Program?
For many small employers, particularly those with 10 or fewer employees, a health plan offered via an affinity program may be one of the most affordable avenues to provide health insurance. Most of these health plans are high-deductible plans, so the premiums are attractively low for employees. Unlike some group health insurance plans, most affinity program health plans do not impose minimum participation requirements, meaning that you can provide a plan to only one employee if you so choose. In a competitive market, the ability to offer any benefits at all places you at an advantage for attracting and retaining high-quality employees.
Affinity programs may limit choice of hospital and health care provider. This is not necessarily a bad thing in terms of quality of service provided, but in a job market in which employees value choice as well as price, many may be put off by those limited options. Also, some of the smaller health care companies that offer affinity programs tend to not have the assets needed to be able to offer as comprehensive a menu of services as what the big health insurance industry players can provide. That’s not to say that they don’t cover the basic set of services; under the Affordable Care Act, even affinity program health plans are bound by essential health benefit requirements.
Who Should Consider Affinity Programs?
For very small companies, especially with fewer than 10 employees, affinity programs can make good economic sense. These programs certainly pay for the cost of chamber membership, and they may just mean the difference between offering health insurance and not offering health insurance to your employees. For larger companies, however, traditional health plans offer the breadth of choice that employees are increasingly expecting from their employer.
David E. Williams is president of Health Business Group, a strategy consulting firm serving clients in technology-enabled health care services, pharmaceuticals, biotech, medical devices and software. He is frequently quoted in the media on the business of health care and is the author of the Health Business Blog. David sits on the board of both private health care companies and nonprofits.