Poor Health

Stiff Competition

Lombar's dilemma is shared by millions of America's entrepreneurs, who are wrestling with one of the tightest job markets in years and double-digit annual health-care cost increases this year.

Finding and keeping good employees these days means offering plenty of competitive benefits, something small employers historically haven't had to do. "Most small businesses I represent feel helpless," observes Keith Rosenbaum, an attorney specializing in health care at Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone in Irvine, California. "They see the health-care benefit as required because they can't attract good workers without it. It's like high-tech companies not offering stock options. The health benefit has become just as important in attracting a talent pool."

The pressure for small employers to offer health-care benefits is increasing. An emerging trend as the labor market continues to tighten: Low-wage hourly workers, the largest group of uninsured, are now being offered health-care benefits by employers ranging from day-care providers to restaurant owners.

Nearly everyone wants and expects health-care benefits today, says Randy Myer, who teaches entrepreneurial policy at New York City's Pace University. "Unlike other benefits, [health insurance] is attractive to many workers because it crosses the age and gender spectrums."

Myer, 52, who founded and still owns shares in Norwalk, Connecticut-based Best Friends Pet Care, a national pet-care company, offered health-care coverage to his hourly workers to reduce turnover and to help in recruiting. It worked. "Many employees said they stayed with us because of the health-care coverage," he says.

If you're forced to shift a greater portion of the premium costs to your employees, it's better to offer some coverage than no coverage, say experts. "Even if employees have to pay a large portion of the premium, it will still be cheaper for them than individual coverage," advises Don Gasparro, managing director of Apex Management Group, a health-care consulting firm in Princeton, New Jersey.

But merely offering a health-care plan may not be enough in today's especially competitive job market. "Your plan has to be competitive with other employers, even much larger ones," Gasparro adds. "You have to see what kind of provider network is around your office and your employees' homes so your people can use it." Matching your particular employees' specific needs with a plan's benefits will save you time and money and also help your employees get the most out of a plan.

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This article was originally published in the April 2000 print edition of Entrepreneur with the headline: Poor Health.

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