Deductibles soar in small business health insurance market

• Echoing a trend across the employer market, small businesses’ health plans saw significant deductible increases in 2018 from the year prior, according to a new eHealth survey of 184 businesses with fewer than 30 employees. The average individual deductible increased by 14% to $3,140 in 2018 (and by 24% since 2015).
• Per-person health insurance premiums in small business plans decreased 2% in 2018 compared to the previous year, eHealth found, but they’re still up by 5% compared to 2015’s figures.
• The study said small business plans have lower per-person costs compared to the individual market. The average premium per-person in a small business plan was 7% lower in 2018 than in an individual plan. The average deductible was 31% lower in the small business plans.

The small business insurance market remains stable, according to eHealth, which owns private health insurance exchange website eHealth.com, while individual plans have seen higher premiums and deductibles in recent years. That trend echoes in the overall employer health insurance market, as well — businesses have increasingly shifted more costs onto deductibles and out-of-pocket costs while increasing premiums slightly. However, premium increases are still rising faster than incomes.

Employers have used benefit design to contain costs. While preferred provider organization (PPO) plans are the most common type of health plan in the overall employer market, PPOs ranked as the third choice for small businesses. Nearly half of small business plans in 2018 were Point of Service plans. That was followed by health maintenance organization (HMO) plans, which represented 26% of small business plans. By comparison, PPOs account for 15%.

One reason that small businesses aren’t as interested in those plans is that PPOs have fewer restrictions, such as allowing out-of-network care and not requiring referrals. Fewer restrictions can lead to higher healthcare costs.

On the flip side, restricted networks can result in lower costs. A recent American Economic Association report found that narrow networks can substantially reduce hospital payments and premiums.

Small businesses are turning to plans like HMOs as a way to contain costs. The survey found that one-third of small businesses choose their health plan based on affordable premiums. Only 10% pointed to strong provider networks as their top reason. Those results indicate that businesses care most about cost and not so much about flexibility.

Employer-sponsored health insurance is more stable than a decade ago when annual double-digit premium increases were the norm. Now, annual premium increases are in the 4-5% range. That stability has also led to more employers offering health benefits. In 2017, the percentage of private-sector employers with health benefits increased for the first time in a decade.

https://www.healthcaredive.com/news/deductibles-soar-in-small-business-health-insurance-market/553583/