For small businesses with fewer than 50 employees, the biggest changes health care reform will bring about are related to the benefits landscape:
1. It will change how the rates of those plans will be determined. (Click here for Health Care Reform and Small Business: Part 1 (Rates), the first part of this discussion.)
2. It will change the types of plans employers will offer employees.
Types of Plans: Slim Pickings Ahead
I predict that the time is coming where brokers will start breaking the news to small groups that they have fewer choices in benefits plans. Health care reform is dictating to large groups how benefits plans have to function. In order to meet the definition of what a plan is, carriers are going to have to redesign their plans.
The carriers for a short time will continue to have a wide variety, although they eventually will narrow the choices to meet what is called a “qualified plan.” The government is telling us all what is appropriate, and this increased pressure on carriers will lead to limited choices for consumers. Robust plans will be available, but they will be cost prohibitive for most employers.
A fascinating thought leader in this area is Dr. Ben Carson. Carson is a pediatric neurosurgeon who was raised by a single mother in inner city Detroit and eventually carried out work on the first separation of conjoined twins. To summarize his big idea, he argues that if the government is going to mandate anything, carriers should be set up as nonprofit organizations. It is an interesting idea to consider. If insurance companies were set up as nonprofits, it would take out the natural battle between a government mandating a product and a business’s focus on making a profit.
What’s a Small Business to Do?
So given the current and impending medical insurance landscape, what can a small group employer do? For companies that are around that 50-employee mark, I would recommend that you think twice about getting bigger or expanding right now. Before you begin growing, be sure you count the costs. We haven’t had to consider these costs in the past, but this is part of our new reality under health care reform. If you need to hire and doing so is cost prohibitive considering the growing costs of health care, you may need to think about increasing the prices of your own services or products.
At the end of the day, you need to know what is in the bucket of money you have to give your staff (wages, taxes, benefits, etc.) and be sure that benefits are still valuable because you will have to evaluate what makes sense. I encourage you to look at your position in the marketplace and the skill set of your employees; see if a salary increase is a better choice in place of health insurance.
Fifty is the magic number when it comes to employee counts. But for small groups under that 50 mark, health care reform still has repercussions. Be ready to tackle those today.
What questions do you have about health care reform? Contact me to see how Servant HR can help.