Cost and Complexity of Healthcare Pose Challenges for Small Business
This quarter, the MetLife & U.S. Chamber of Commerce Small Business Index surveyed small businesses about how they select healthcare plans for their employees.
The survey tracked three important trends about how small businesses learn about and select healthcare plans:
- Most small businesses (69%) say the process of navigating healthcare options can be time consuming. 42% strongly agree with this sentiment.
- Small businesses commonly rely on human experts for advice. Small businesses most commonly (32%) turn to insurance brokers, consultants, or agents to make informed decisions about healthcare plans.
- Cost is the key driver of decision making. The top priorities for small business owners when considering healthcare coverage options are keeping insurance premiums and out-of-pocket costs (like co-pays) low.
Survey respondents added that small business owners are most commonly (41%) responsible for choosing healthcare coverage and other benefits. But larger small businesses tend to delegate this duty to their HR departments.
- Small businesses with fewer than 20 employees are more likely (41%) to say the owner manages benefit-related decisions compared to those with 20 or more employees (23%).
Most Small Businesses Find Choosing Healthcare Plans Time Consuming
The survey revealed that small businesses find they have enough information to make informed decisions about healthcare, but that they find it time consuming to select the right plan.
- Most small businesses believe they have enough information to make informed decisions (74%).
- Almost as many (67%) say they are able to stay informed about changes in healthcare laws and regulations that could impact their business.
- However, a majority (69%) also report that the process of navigating healthcare options is time consuming, with 42% strongly agreeing with this sentiment.
SMALL BUSINESSES TURN TO HEALTHCARE EXPERTS TO MAKE DECISIONS
Small businesses go to a variety of sources of information to learn about offering healthcare coverage for their workers, but clearly prefer talking to actual human experts about available options:
- Small businesses most commonly turn to health insurance or benefit brokers, consultants, or agents (32%) for information regarding benefit plans.
- Fewer turn to Google or other search engines (9%), other business owners (7%), or some “Other” type of resource (11%) to find information on healthcare options.
- A small percentage (7%) says they do not know where to go for information on choosing a healthcare plan.
The top priorities for small business owners when considering healthcare coverage options are keeping insurance premiums and out-of-pocket costs low.
Here’s a breakdown of the top priorities for small businesses considering a healthcare plan:
- Decision makers rated both low premiums (20%) and low out-of-pocket costs like co-pays and deductibles (20%) as the most important criteria for selecting a healthcare plan.
- However, larger small businesses (with 100 or more employees) also see flexibility and variety in choice as a major consideration with 21% seeing this as a priority, compared to just 7% for mid-size and 9% for small size small businesses.
- These larger small businesses also prioritize keeping out-of-pocket costs (25%) and insurance premiums low (24%).
SMALL BUSINESSES SAY HEALTHCARE COSTS CROWD OUT OTHER PRIORITIES
Small businesses are the most familiar with more traditional forms of healthcare coverage options, such as traditional group health insurance (66%).
They are less familiar with other options:
- 43% are familiar with changes to contribution limits for health savings accounts.
- 35% are aware of group coverage health reimbursement accounts.
- 28% are familiar with Association Health Plans.
- 22% know about a qualified small employer health reimbursement arrangement.
- 19% have heard of taxable stipends.
By sector, retailers struggle the most to find information to enable them to make informed decisions about healthcare. Small business sectors reporting that they have enough information to make informed decisions about healthcare coverage are:
- 81% in professional services.
- 74% in services.
- 72% in manufacturing.
- 68% of retail businesses.
Costs of offering healthcare are a big concern for the majority of small businesses. A majority (57%) say the cost of healthcare crowds out other priorities for their business and 41% report not being able to provide their employees with good coverage options.
By sector, concerns over healthcare costs are greatest in manufacturing (62%), as compared to services (57%), professional services (55%), and retail (53%).
Retailers are also the least likely to report they are able to provide good healthcare coverage options by a significant margin. Here’s how sectors rated themselves on their ability to provide good healthcare options for their employees:
- 54% in professional services.
- 54% in manufacturing.
- 46% in services.
- 36% of retailers.