Through the Roof

Bargain-Hunting

Despite the grim situation, entrepreneurs are not out of ammunition in their battle against rising health-care costs. Small businesses can focus more on preventive care, says Patricia Halo, author of Managing Health Benefits in Small and Midsized Organizations. (AMACOM). "As an employer, you have to create a healthy environment if you hope to reduce chronic and catastrophic illnesses, which eat up most health-care dollars," Halo says. Halo recommends offering healthy breakfasts rather than coffee and doughnuts, holding educational sessions that teach employees about fitness and banning smoking in the workplace. "Employers have to be clear that the privilege of health insurance comes with the responsibility of taking care of your health," she says.

Halo also suggests that small businesses seek out state-funded health-care subsidies and use "report cards" put out by organizations like the National Committee for Quality Assurance, which analyze and compare health plans. "Most small businesses don't realize that many states pay for some health care for companies with few employees, or that some of their employees may be eligible for government programs like Child Health Plus [a New York children's health insurance program]," Halo says.

71%
of small businesses that offer health insurance provide employees with just one health plan option.

SOURCE: The Kaiser Family Foundation, "National Survey of Small Businesses"

Ultimately, many business owners believe the best way to keep health-care costs stable is to join association plans, in which small-business owners band together to give themselves more power to negotiate with insurers. Two years ago, Visual Edge Imaging Studios, a three-person imaging company in Dayton, Ohio, joined an association plan offered through the Greater Cleveland Growth Association. "The association plan has been by far the best option," says Visual Edge co-owner Randy Sowash, 38. "Under the association plan, our premiums rose by only $8 last year."

As in Ohio, trade associations already organize association plans in many other states, and in the next two years Congress may allow national trade groups to sell health insurance to their members. Halo estimates that a small business could reduce health-care costs by up to 25 percent by joining an association. She says: "When you're facing the craziness that is small-group insurance today, 25 percent could mean an enormous amount."

Online Exclusive: Under the Knife
Cut your health-care costs with these penny-pinching tips.
  • Hit the books: Research customized health plans that tailor drug benefits to small companies' needs, defined-benefit plans, or insurance agents who only serve the small-group market.
  • Put your staff on a diet: Offer fruit, bottled water and other healthy items to your work force; allow your employees time to eat lunch away from their desks so they can manage their stress levels and enjoy a healthy meal.
  • Pass the buck: To encourage workers' consciousness of health costs, raise deductibles and co-pays or choose a health plan that has much lower co-pays for generic drugs.
  • Join the crowd: Research association plans offered in your state. Because of their size, many association plans are exempt from state mandates that force insurance providers to pay out more in coverage.
  • Call the government: Phone your state health insurance office to see whether your business qualifies for health-care subsidies to small employers or minority-run businesses.

Joshua Kurlantzick covers trade and international economics for U.S. News and World Report

Contact Sources

  • Independent Business Association of Wisconsin
    1400 E. Washington Ave., #282, Madison, WI 53703, www.ibaw.com
  • National Center for Policy Analysis
    12655 N. Central Expwy., #720, Dallas, TX 75243-1739, www.ncpa.org
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This article was originally published in the September 2002 print edition of Entrepreneur with the headline: Through the Roof.

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