A study of more than 477,000 small employers (50 or fewer employees) revealed high premiums fell as population increased and a strong preference for PPOs.
America's Health Insurance Plans (AHIP) conducted a study in 2010 of approximately 3.7 million workers, including more than 70 percent who were in small groups of less than 10 employees. The study found average premiums of $426 ($5,107 annually) for individuals and $1,117 ($13,409 annually) for families.
However, within the small group market, premiums fell as firm sized increased. Companies with between 26 and 50 employees paid an average of $406 per month for single coverage, while firms with between 11 and 25 employees paid an average of $419 per month for single coverage, and firms with 10 or fewer employees had average monthly premiums of $446 for single coverage.
Plan choices ranged across the board, though PPO plans were overwhelmingly chosen by the majority of small groups (68 percent). Twenty-three percent had a health maintenance organization, often with a point-of-service (POS) option, while 7 percent of enrollees had a health savings account (HSA) benefit, with a qualifying high-deductible health plan (HDHP). Health reimbursement accounts (HRA) with a qualifying HDHP and indemnity plans made up the remaining 2 percent of enrollees.
Additional survey findings included:
- Premiums varied widely by state. A high of $565 ($1,483 for family coverage) was recorded in West Virginia, while there was a low of $302 ($793 for family coverage) in North Dakota. Factors affecting premiums include state regulatory rules and rating requirements, health status or health risk factors among state or local residents, state premium taxes or assessments, the cost of hospital and physician services in local areas and the types of products chosen, and degree of deductibles or other cost-sharing purchased by small businesses.
- Roughly two-thirds of the states have adopted premium rating rules designed in the early 1990s by the National Association of Insurance Commissioners (NAIC), which allow rates to be adjusted for demographics of enrollees in a group, but place limits on the magnitude of adjustments for health status and claims experience.
- Twenty-four percent of small group enrollees had a choice of two or more benefit plans. Of workers offered an HSA plan, approximately 40 percent also had a choice of an alternative plan, usually a PPO or HMO/POS plan. Forty-four percent of enrollees in small groups chose HSA/HDHP plans when offered a choice among these and other product types.
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