State of the Industry: Small Employers

Some estimates place the ratio of small businesses-those with 50 or fewer full-time employees-to be as high as 75% of all U.S. companies. Many of them don’t offer health insurance to their workers now, and most (68%) survey respondents expect the ones that do to stop providing insurance and send employees to individual exchanges.  

Not so fast, says Dan Hilferty, president and CEO of Independence Blue Cross and an
MHE editorial advisor.

“We believe that employer-sponsored business will continue to be a very important segment in the marketplace, and we think that for most small employers, 2014 will be a wait-and-see year, watching how the federal exchanges evolve,” he says. “We also think the small-group marketplace will stay viable because health insurance is an important employee benefit. The emphasis will be more on how the employer will offer coverage, and we will need to provide both the popular standard options and new alternatives like defined contribution, private exchanges, or individual products.”

Those options will help dictate whether small employers choose to offer more robust health insurance plans as a competitive advantage, take a bare bones approach, or even just pay the Patient Protection and Affordable Care Act’s penalty for not providing adequate coverage.

“Employers will have many decisions to make in light of reform, including the continuing question about affordability,” says Hilferty. He says insurers need “to do everything we can to help employers keep costs down and provide a full array of options for products and services that meet the required essential health benefits and exceed our customers’ expectations.”

Only 13% of the survey respondents expect small employers to purchase off-exchange products directly from carriers.