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Health Insurance Costs: Solutions for Smaller Businesses

Small and medium-sized businesses can reduce health insurance costs by sharing some expenses with employees and raising deductibles and co-pays.

Phillip M. Perry (Web Exclusive/Feb 09)
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Coalitions Can Lower Expenses
Acting alone, the single employer has limited negotiating clout with healthcare providers. For groups of employers, the story is much different. Healthcare coalitions can often help reduce the expenses associated with such programs as drug and vision benefits, dental plans, and disease management. In some cases, coalitions offer health insurance itself at a reduced rate by bidding their employer members as a block to carriers.

"There is a simple dynamic in any marketplace," says Webber. "If you can aggregate your purchasing power, then whoever is producing a good or service is willing to reduce the cost of that service."

Coalitions offer another benefit besides lower cost: the greater choice otherwise available only to large organizations. Employees of the 160 member organizations of the New York Business Group on Health (NYBGH) can select the plan they want from 26 healthcare options, plus dental, long term disability, life insurance, and accidental death and dismemberment coverage. "We allow the small business to offer big business benefits," says Laurel Pickering, the group's executive director.

Informed Employees Are Healthier
Shifting costs, cutting benefits, and joining coalitions can help tame the health insurance monster. Change can be frightening, though, and employers need to maintain open lines of communication with workers to avoid affecting morale.

"It's a mistake if employers do not adequately communicate health benefit changes to employees, along with the reasons why changes are being made," says Natchek. "People need to feel they are partners. They need to understand the true cost of health care, how their actions can make a difference and how they can become healthier individuals."
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