Health insurance coverage remains a huge challenge for small businesses due to cost. Health plan providers and brokers are in a unique position to address these challenges and target the working uninsured with affordable options for coverage.
The United States labor force is built on the shoulders of small businesses. More than one-third of the workforce is employed by a firm with under 100 employees- whether that be in hospitality, food services, or startups. According to the U.S. Census, this number represents more than 40 million employees, a number that with the fortune of a thriving economy, will only continue to grow.
But this positive outlook doesn’t seem to be resonating with small business owners, according to insights from the National Federation of Independent Business. The federation’s “Small Business Optimism Index” took into account small business plans to increase employment and inventories, as well as their expectations of personal sales and overall economic and credit improvement- all of which declined from December 2015. The waning optimism of small business owners point to the largest economic challenges facing small businesses today: balancing affordability with growth.
This balancing act has long been witnessed in the small business health insurance market where the majority of small businesses continue to not offer health insurance benefits primarily out of fears of affordability. These small businesses make up the bulk of the working uninsured, according to the Kaiser Family Foundation, who, in a prosperous economy, are looking for competitive benefits. For insurers and brokers alike, effective strategies for attracting this coverage gap comes from knowing your audience and meeting them where they are. Part of which comes from a deeper understanding of their pain points. Small businesses have proved to be one of the most elusive populations to serve, despite efforts under the Affordable Care Act (ACA) to do just that with the creation of the Small Business Health Options Program (SHOP) Marketplace and the existence of small business tax credits to make small group health plans a more affordable option.
Yet affordability remains not only a top concern for these small business employers, but also the employees in which they represent. According to U.S. Census data, the average salary for small businesses with under 50 employees remains under $40,000, well below the national household average. Adding to the complexity, blue-collar employees may work multiple jobs across all industries, as seen with part-time employees suffering most under this coverage gap.
Attracting such a budget-conscious audience requires budget-conscious solutions. Simply put, in a study conducted by the Robert Wood Johnson Foundation, 70% of representative small businesses reported that they would offer health insurance if they could find an affordable option. With the passage of the ACA- health insurers and brokers can do just that: The availability of subsidies on the individual marketplace encourages small businesses to consider forgoing employer-sponsored group coverage to the individual marketplace as a cost-savings measure. And, although some of these employees may qualify for Medicaid or other government backed programs, many more are eligible for these subsidies on the individual marketplace. The heath insurers and brokers who can offer both small group and individual plan options with decision-support tools to help guide this population will expand their market opportunity and differentiate themselves as consultative business partners in a hyper competitive landscape.
Additionally, it is health insurers and brokers that are in the unique position to address this audience. These stakeholders are best suited to provide the expert attention needed to guide small businesses to the best decision for their individual business. Particularly for brokers, this is a captive audience: the vast majority of small businesses already use brokers and rely on their subject matter expertise to guide their health insurance decisions. This underserved population is equally beneficial for brokers and poses a stable market opportunity.
As the uninsured get harder and harder to attract, it is vital for brokers to have the necessary tools to meet small businesses where they are and anticipate their needs across all ages and incomes. Many of these challenges can be overcome with core business objectives that currently separate the good health insurance brokers from the best: outreach, engagement, and decision support technology that is ahead of the curve. By embracing these, brokers can effectively attract and inform these small businesses, and get more covered, faster.
Sally Poblete, is CEO of Wellthie, an insurance technology company offering e-commerce software and analytics solutions for brokers and carriers, located in New York City.