Small- and medium-sized businesses can find low-cost health insurance for their employees if they know what they’re looking for and are prepared to be innovative. The following practices are being used by savvy business owners to secure high-quality coverage that fits their budgets.
- Consider plans that offer a focused network of health care providers: Prices vary widely among health care providers, but there is no systematic connection between high cost and high quality, according to a comprehensive RAND Corporation study published in the Annals of Internal Medicine. In response to these findings, health plans have begun setting up networks that include only those providers that demonstrate top quality at affordable prices. These so-called “narrow network” products allow employers to obtain low-cost health insurance without sacrificing quality. Well-designed networks offer ample choice of providers while still keeping costs under control.
- When evaluating networks, look beyond doctors and hospitals: Doctor visits and hospital stays account for most health care spending, according to the Centers for Disease Control and Prevention, but pharmacy costs are significant, too. Employers can save on drug costs and reduce dispensing errors by selecting health plans that encourage members to order “maintenance medications”—drugs used for many months or years by patients with chronic conditions—through the mail. Some plans also offer a focused network of retail pharmacies, which preserves convenience for members while holding the line on costs.
- Use high-deductible plans and HSAs to align incentives: Employees know that health care is a major expense and most are willing to do their part to help keep costs under control. High-deductible health plans align the interests of employers and employees by providing employees and their families with incentives to make cost-effective choices. In a typical situation, the employer and employee both contribute to the employee’s health savings account (HSA). These funds are used to pay for health care expenses until the deductible is met. Unused funds are rolled over, so employees who do a good job of managing expenses—for example by going to urgent care centers instead of hospital emergency rooms—will see their HSA balances rise from year to year. Members enrolled in high-deductible plans tend to spend significantly less than those in traditional plans, according to the Employee Benefit Research Institute. As a result, premiums are lower.
By implementing these strategies, you can control costs while continuing to support your employees with a competitive benefits package. Be sure to talk to your broker or health insurance carrier about these ideas and see if they can work for your business.
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.