Collaborating with communities to deliver affordable health care

Employee demand for affordable health insurance is rising, but rates and service costs are going in a different direction. This has owners of small-and medium-sized businesses (SMBs) worried that they can’t find a solution that fits their unique needs. When employers are uncertain about price increases year-over-year (YOY), they are afraid to make promises to their employees. It’s difficult to commit to subsidizing one year of coverage knowing rates will likely rise exorbitantly the following year; imagine what these increases can do to the morale of a company.

National insurance premiums are rising every year as a result of more expensive drug treatments, higher drug costs for private plans, and inflation’s impact across all industries. It’s not uncommon to see increases of 15% to 20% or more YOY – we’ve even seen annual increases of 40% to 60%!  As a result, SMB owners are not able to plan for these inconsistent increases. When employers don’t have a health care plan that meets their unique needs, they often struggle to compete for top talent, as employees will quickly move on to the next job that boasts better benefits. Experienced brokers and benefits advisors  know that the average employee earns $15 to $20 an hour, and high deductibles and extreme out-of-pocket costs make it impossible to afford health care for themselves, let alone their families. 

The solution is community-driven collaborations between SMBs, brokers, local hospitals, and grocery store pharmacies. Entrepreneurs are the bedrock of every American community, and we must work together to address their health care needs. From taking care of employers and employees to matching out-of-pocket (OOP) costs to what they can afford, smart collaborations are the best solution for SMB owners and their employees. 

Embracing SMB purchasers by addressing user needs

SMBs (under 500 employees) make up 99.9% of U.S. businesses, according to the U.S. Small Business Administration, and nearly half of all U.S. employees work for them. Now consider that almost 60% of the nation’s workers—about 82 million Americans—are paid hourly, with over a third paid less than $15 per hour. At 40 hours per week, that’s less than $30,000 in annual net earnings. Take these folks off the clock for minutes and it’s costing them their paycheck. This is why we’re not seeing them in the outpatient clinics and urgent care facilities. Most of these employees don’t have more than $1,000 in the bank, meaning the risk for bankruptcy is high when deductibles and OOP costs continue to rise. The SMB workforce simply cannot afford anything in the traditional healthcare insurance market today. 

At the same time, local hospital systems—a crucial piece of community infrastructure—cannot afford to take care of patients who don’t have the money for high OOP costs. Imagine you are an SMB employee paying for a traditional health plan with a $10,000 family deductible. Your child needs their appendix removed—a common surgery—and the hospital has negotiated the repair at $11,000. Including OOP costs, the user is still responsible for nearly all of this. Without $10,000 in the bank, the hospital will get paid a fraction of the cost. 

Every hospital is concerned about OOP costs that can’t be paid by the SMB workforce. 

Build your book of business by creating SMB participation 

Let’s consider what’s possible with collaboration.

If brokers were to go back in their books 10 years, they’d likely see a 50-person company with participation rates upwards of 60%-80%. Today, because of increased OOP costs and high family premiums, that figure might have dropped to just 20%-30%. 

There’s a clear trend of participation numbers going down as costs go up. Employers can’t afford the uncertainty of what plans will cost next year, but neither can brokers afford for the participation rates of these smaller clients to be so low. Plus, brokers need the certainty of participation linked to price.

To implement community-wide health care solutions, brokers can partner with plan administrators who know the most cost-efficient routes to creating plans that keep prices down for SMB workers—de-risking owner buy-in and building value-based pricing into the plan. These administrators work with care providers, like hospitals, to gain and streamline participation by negotiating favorable service rates up-front. 

After all, the hospital systems can’t work alone, either—they need to partner with a health care plan that ensures their staff gets paid what they expect to be paid. Having this value-based cost control system in place ultimately means lowering costs on end users of health care, while delivering the pay that hospital systems expect with reliability and ease. 

More than ever, SMBs must have a cost control system that manages their employees proactively and will navigate people through the system when they need care. Some are even coming together to have a medical director help oversee population management of their companies and care navigation. 

By partnering with the right plan and keeping costs down, SMB owners don’t have to fear high increases in coverage prices the following year. Brokers can sell these plans with believability in mind while boosting participation and employee satisfaction. The result is that every party works more effectively at serving their community.  As a broker, imagine finally having the opportunity to bring a new plan to your clients with a cost control system in place that boosts participation and employee satisfaction while building your book of business. A plan that is both affordable and accessible is possible.

Brokers are the lynchpin

The big feat to be celebrated here is collaboration: The pieces are there for everyone in the community to have their health care needs met; they just need to be arranged strategically so that expectations align. Traditional health care plans and providers have lost sight of the fact that entrepreneurs have always been the fabric of communities. These business owners are willing to take on risks that others aren’t, yet they’ve been left behind and gradually excluded by the health care system. 

Enter brokers, who interface with their community daily. Whether they’re new on the block, prioritizing larger accounts like local government, or handling 20 SMB clients, brokers know the math today isn’t working. Participation rates are going down and they’re beginning to see the effect on small businesses, their workforce, and employees’ families.

Any broker with enough influence in their community can rally the local hospitals, pharmacies, and SMBs. In smaller communities, there’s less need for hospitals to overcharge when they can have certainty of payment—especially where reputation is concerned. Grocery stores with pharmacies can help guide and provide service with prescription drugs at significantly lower rates than the big-box retail competition. These are the dots waiting to be connected. Where brokers may have trouble is putting together the health care plan that appeases care providers while keeping OOP costs low for users. The good news is that innovative plan management beyond what traditional providers can offer is here—and these collaborators are welcoming brokers with open arms. The time is now.

Dr. David Berg is CEO and co-founder of Redirect Health.