A recent study by the Kaiser Family Foundation and the Health Research and Educational Trust reported that the percentage of California employers offering health insurance has risen from 48 percent in 1999 to 60 percent in 2000. As with most things, there are two ways to view this news.
On one hand, an increase of 12 percent in just one year should be applauded. Meaningful change is often slow in coming, and any double-digit increase is worthy of note. But on the other hand, this report reminds us that a full 40 percent of employers in the state are failing to offer their employees any health insurance at all.
Forty percent is a large number and anyone rejoicing in the progress made is missing the point. California continues to lag behind the national average and it could get worse. If the state’s economy continues its slowdown, the Kaiser report warns that employers may “stop giving insurance benefits just as quickly as they started giving it.”
Virtually all big businesses offer health insurance. The fate of small employers is quite another story.
The main reason so many small employers don’t offer health benefits is, of course, cost. For small employers with tight margins, health insurance is a luxury they often don’t feel they can afford. And with premiums rising in excess of 10 percent for the first time in years, even those offering insurance today are seriously reconsidering the financial viability of offering such coverage. Lacking a way to control those increases and assure budget predictability, employers with the best intentions often must succumb to harsh realities.
There are other reasons too for small-employers’ decisions. They range from complications in trying to select a single health plan right for all of their employees to the difficulty in administering a plan. Add to that dealing with employees who complain “my doctor isn’t included” or “they don’t cover the drug I need” or “you’re not giving me enough choice” and small employers end up feeling that they are losing out in the “value equation.” High costs combined with lack of choices, administrative nightmares and underwriting hassles all cause some small employers to throw up their hands and simply choose not to play.
Fortunately, as of late, new “health purchasing alliances” have emerged to help small employers with the obstacles that have plagued them for years. Under such programs, the employer sets a budget and defines the contribution they will make toward their employees’ health coverage. With a minimum employer financial contribution level of 50 percent, these alliances make for great value. Employees then select from a wide range of competing health plans and varying benefit levels to find the one that best meets their individual family needs.
An Equal Footing
Employers have embraced this approach because it provides cost predictability, removes the burden of choosing a single health plan and produces a more satisfied work force. It also puts small and large employers on more of a level playing field as far as health care benefits are concerned, and that’s made it an effective recruitment and retention tool. Employees win because it puts the decision making power where it should have been all along , squarely with them.
Let the latest Kaiser study be both a warning bell and call to action. Forty percent of the state’s employers not offering health insurance is an unacceptable number. It is the responsibility of the insurance industry to make sure that programs, pricing and options are in place that allow the employer to offer health coverage that meets the needs of employees and be able to keep offering such coverage in the face of a tough economy.
Word is co-founder and managing partner of CaliforniaChoice and former president of the California Association of Health Underwriters.