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Eight factors that determine the success of health reform transition in a small business
by Tony Novak, CPA, MBA, MT
Passage of the Affordable Care Act in 2010 triggered a flood of new opportunities that make it easier for small businesses to save money while boosting the performance of their employee health plans. Small businesses have an unprecedented access to tools that can save money and boost employee satisfaction. The introduction of SIMPLE cafeteria plans, pre-existing condition insurance plans, the national health insurance clearinghouse, state and private insurance exchanges, and health navigators are available to small employers now. Expansion of commercial health plan products like voluntary supplemental benefits, defined benefit or mini-med insurance plans, wellness programs and preferred provider pricing plans provide additional options. Yet many employers are still unaware of these resources and those that have tried some of the new plans report mixed results.
With the scheduled dismantling of the small business health insurance market as we know it less than two years away, addressing these sticking points has become critically important.This article looks at the factors that determine success in the adaption to health reform measures.
1.Online access and technical proficiency – Health reform programs contemplate interaction with users through online systems. Many health benefit resources are now difficult or impossible to access offline and consumers may be caught by surprise to hear that there is no paper version of a form they need. We’ve jokingly commented on the trend that health plans are becoming just another smart phone ‘app’. The problem is that millions of Americans are not connected with online services on a meaningful basis. Many small business employees have computer access only outside of regular work hours. Companies with workers that do not use email have the largest challenges since the majority of government and private health plans and employee benefit services now rely on email as the primary method of communication with health plan members. Some users with online access still report a lower level of success in arriving at intended results when dealing with online health plan resources. The difficulties may be related to hardware and software or may simply reflect of the amount of time and skill that an individual user has spent with similar online services. It may be important to note that neither the government health plans nor the private insurance exchanges have plans to make health plan enrollments available through mobile devices – the fastest growing segment of Internet devices. Member services, billing and claim services are typically now available as cell phone applications. Individual employees are expected to have access to and be able to use a terminal type Internet-connected computer for health plan enrollment and have access to a private email account for confirmations and delivery of HIPAA-required notifications.
2.Access to information – Many Americans are simply unaware of the details of health reform and the array of new approaches products and services that are now available. The Department of Health and Human Services launched a massive consumer and community outreach program but this has barely scratched the surface of health reform education. The effort to reach business advisers has been inadequate.The primary reason that many small firms give for not updating their health plans is that they simply did not know that better options were available.
3.State laws – More than half of the states have filed lawsuits against the federal government to block one or more health reform provisions. Many of these states have also taken measures that could be described as “hostile” to those who engage in health reform measures. For example, one state made it illegal for insurance agents to recommend that small companies replace employer-sponsored group insurance with individual portable insurance plans. As a result, your state of residence is currently a factor that plays a role in the ultimate success of adapting health reform measures.
4.Access to health navigators – the nation’s insurance agents and brokers are slowly making the transition from commission-based product sales to a fee-based service providers under the part of the law known as “navigators”. A navigator shows the entire variety of health insurance plans available and helps each consumer choose the best options. (We say ‘options’ because a growing majority of consumers will elect two or more health plans in this post reform environment). In some areas there is a shortage of health navigators who are trained in health reform provisions.
5.Access to plan advisers – Employee benefit consultants have focused on larger employers in the past while smaller companies worked directly with insurance companies and brokers. Health reform dictates that all small employers will benefit by working with a third party health plan adviser or administrator. The plan adviser takes the business owner’s instructions and translates that to a qualified health plan, prepares the plan documents and integrates the voluntary employee benefit enrollment elections with the business payroll service. Accounting firms and insurance agencies are moving into this field but small businesses may still experience difficulty finding qualified and affordable professional health plan advisers. In micro business health plans the plan adviser is often the same person as the health navigator.
6.Consumer attitudes – Some employees have preconceived ideas of what health reform should do for them or may be stuck on a concept like “single payer” that ultimately did not become part of the reform law. Dissenting attitudes can sabotage health reform implementation.
7.Employer attitudes – Some believe that the Supreme Court will put a halt to health care reform and are taking a wait-and-see approach. Professional observers think that overturn is unlikely. In any event, the issue should be resolved within the next five months. Once the ruling is issued, we expect to see a mass rush toward measures that cut costs and insulate employers from health care inflation.
8.Employer funding – Health care expenses are nation’s fastest growing category of costs and so it is no surprise that small employers cannot keep pace with this rate of inflation. Alternative employee health plan designs are available to limit costs and control inflation as long as an employer can maintain a minimum level of funding for employee health benefits. We suggest that the minimum cost for any small business that sponsors a successful health plan is 2% of payroll plus $150 per employee per year. Professional costs add another $1,000. Some small businesses on a shoe-string cash flow may need to revitalize their core financial operations in order to be ready to sponsor a successful health plan for employees.
When these issues are properly addresses a small business is much more likely to achieve significant savings in employee health expenses while employees report a higher level of satisfaction with their health coverage.
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