Health Care Coverage and Costs in Small Business: An Exploratory Study

Health coverage and health care costs continue to frustrate employers, employees, and public policy makers. Controlling escalating health costs, improving coverage for the uninsured, and providing retiree health care are all important to the small employer. This study was undertaken to investigate the availability and extent of health care coverage and to assess the effects of health care costs on small firms. The results revealed that the percentage of small firms offering health benefits totaled 58 percent. The availability of group health insurance increases as firm size increases. Small employers cited insufficient profits, high insurance costs, and unavailable group coverage as the primary reasons for not offering health benefits. The results also indicated that the vast majority of small firms opposed a mandated employer-provided health coverage and suggested that small businesses should pool together to form groups to reduce the cost of health care coverage for small firms.     

Health care coverage and costs in small business: an exploratory study

Health coverage and health care costs continue to frustrate employers, employees, and public policy makers. Controlling escalating health costs, improving coverage for the uninsured, and providing retiree health care are all important to the small employer. This study was undertaken to investigate the availability and extent of health care coverage and to assess the effects of health care costs on small firms. The results revealed that the percentage of small firms offering health benefits totaled 58 percent. The availability of group health insurance increases as firm size increases. Small employers cited insufficient profits, high insurance costs, and unavailable group coverage as the primary reasons for not offering health benefits. The results also indicated that the vast majority of small firms opposed a mandated employer-provided health coverage and suggested that small businesses should pool together to form groups to reduce the cost of health care coverage for small firms.     

Between a rock and a hard place: understanding the employer mind-set

Large and mid-size employers are "between a rock and hard place" when it comes to health benefits: They are both unable to manage their health care costs effectively or simply get out of offering these benefits entirely. Although there is considerable diversity in how employers approach health care, several goals underlie most of their decisions. It is unlikely that the current round of employer-based health initiatives will succeed at managing rising costs. As a result, employers are likely to become more interested than at any time in the past decade in exiting their roles as providers of health benefits.     

Engaging Quad/Graphics employees in the improvement of their health and healthcare

In an era when rising healthcare costs threaten the competitiveness of American businesses in an increasingly global marketplace, we describe Quad/Graphics on-site primary care (QuadMed) clinics tightly integrated with wellness, fitness, rehabilitation, and occupational medicine. We further describe the Lean You wellness program recently put in place to stem the rising burden of obesity. The Lean You program illustrates how an integrated employer and health provider system can become even more engaged in collaborative care with its employees. Financial and clinical data suggests that at Quad/Graphics-QuadMed, these full-service health service approaches are effective.     

Business, households, and governments: health care costs, 1990

This annual article presents information on health care costs by business, households, and government. Households funded 35 percent of expenditures in 1990, government 33 percent, and business, 29 percent. During the last decade, health care costs continued to grow at annual rates of 8 to 16 percent. Burden measures show that rapidly rising costs faced by each sponsor sector are exceeding increases in each sector's ability to fund them. Increased burden is particularly acute for business. The authors discuss the problems these rising costs pose for business, particularly small business, and some of the strategies businesses employ to constrain this cost growth.     

Savings in electronic medical record systems? Do it for the quality

National policymakers are considering whether to make major long-term investments in electronic medical record (EMR) systems. The matter of rising health care costs is never far from any health care debate, and the prospect for EMR systems to decrease costs is a potential selling point. The paper by Richard Hillestad and colleagues presents a well-documented analysis of the potential costs, savings, and other benefits of widespread adoption of interoperable EMR systems. It focuses on the potential savings such systems could yield. Here I examine the main components of their argument and question whether such savings could ever be realized.     

Purchasing cooperatives for small employers

Despite a booming economy, the number of uninsured Americans is rising. It hit nearly 42 million in 1996. Many of the uninsured work at businesses with fewer than 50 employees. Because small firms have traditionally found it difficult to provide health benefits, purchasing cooperatives have grown in scope and size across the country in recent years. By bringing small businesses together to buy insurance as a group, these organizations can help employers provide greater choice to their workers at a lower cost. However, to operate well in the insurance market, purchasing cooperatives must be well-designed and provided with adequate legal protections.     

The see-through hospital

Health care providers are under the gun to become more transparent on everything from quality to prices to charity care. But just what transparency entails,how the information is used and who benefits are anything but clear. Advocates say it will improve quality, control costs and lead to a dearer understanding of community benefits.     

Privatization in a publicly funded health care system: the U.S. experience

The United States has four decades of experience with the combination of public funding and private health care management and delivery, closely analogous to reforms recently enacted or proposed in many other nations. Extensive research, herein reviewed, shows that for-profit health institutions provide inferior care at inflated prices. The U.S. experience also demonstrates that market mechanisms nurture unscrupulous medical businesses and undermine medical institutions unable or unwilling to tailor care to profitability. The commercialization of care in the United States has driven up costs by diverting money to profits and by fueling a vast increase in management and financial bureaucracy, which now consumes 31 percent of total health spending. The Veterans Health Administration system--a network of government hospitals and clinics--has emerged as the leader in quality improvement and information technology, indicating the potential for public sector excellence and innovation. The poor performance of U.S. health care is directly attributable to reliance on market mechanisms and for-profit firms, and should warn other nations from this path.     

The 1990 national executive poll on health care costs and benefits

In its first annual survey, Business & Health polled corporate leaders nationwide. We asked how much companies are spending on health care, what benefits companies are offering now and what they plan to offer in the future, and how much emphasis firms are putting on managed care and wellness. We also asked what worries executives most about health benefits and who they blame for rising costs. Here's what we found out.     

Development of a Community-Wide Cardiovascular Risk Reduction Assessment Tool for Small Rural Employers in Upstate New York

Employers are implementing workplace health promotion programs that address modifiable health risk factors such as overweight and obesity, smoking, high blood pressure, high cholesterol, physical inactivity, poor diet, and high stress. Research with large employers has found that these programs can improve workers'' health and decrease the costs associated with medical care, absenteeism, and presenteeism. Despite their promise, health promotion programs are not widely embraced by small businesses, especially those in rural communities. This article reviews the barriers encountered by small and rural businesses in implementing health promotion programs. We describe an approach developed in cooperation with the New York State Department of Health''s Healthy Heart Program and the Cayuga Community Health Network to engage small businesses in health promotion. We review the development and implementation of an assessment tool created to evaluate current workplace health promotion programs, policies, and practices targeting cardiovascular disease among small, rural employers in upstate New York. Potential benefits of the assessment tool are discussed, and the instrument is made available for the public.     

Benefit flexibility,cost shifting and mandated mental health coverage

This paper presents a policy analysis of options for making a state’s mandated mental health benefit more flexible while maintaining insurance premiums at a constant level. The analysis illustrates the difficult choices facing legislatures that attempt to balance improved coverage for mental health care with concerns about rising health care costs. A sophisticated simulation model is used to assess the costs of four alternative insurance benefit design options.     

Examining the scope of multibusiness health care firms: implications for strategy and financial performance

OBJECTIVE: Use theory and data to examine the scope of corporate strategies for multibusiness health care firms, also known as organized or integrated health care delivery systems. DATA SOURCES: Data are from the 2000 HIMSS Analytics Annual Survey of integrated health care delivery systems (IHDS), which provides complete information on businesses owned by IHDS. STUDY DESIGN: Scope defined as the breadth and type of businesses in which a firm chooses to compete is measured across seven separate business areas: (1) health plans, (2) ambulatory, (3) acute, (4) subacute, (5) home health, (6) other related nonpatient care businesses, and (7) external collaborations. Theories on strategy and organizational configurations along with measures of scope and a novel dataset were used to classify 796 firms into five mutually exclusive groups. The bases for classification were two competitive dimensions of scope: (1) breadth of businesses and (2) mix of existing core businesses versus new noncore businesses. Data Extraction METHODS: Unit of analysis is the multibusiness health care firm. Sample consists of 796 firms, defined as nonprofit organizations that own two or more direct patient care businesses in two or more separate areas across the health care value chain. Firms were clustered into five mutually exclusive organizational configurations with unique scope characteristics revealing a new taxonomy of corporate strategies. PRINCIPAL FINDINGS: Analysis of the scope variables revealed five strategic types (along with the number of firms and distinguishing features of each strategy) defined as follows: (1) Core Service Provider (340 firms with the smallest scope providing core set of patient care services), (2) Mission Based (52 firms with the next smallest scope offering core set of services to underserved populations), (3) Contractor (266 firms with medium scope and contracting with physician groups), (4) Health Plan Focus (83 firms with large scope and providing health plans), and (5) Entrepreneur (55 firms with the largest scope offering both a core set of services and investing in a variety of new noncore business opportunities including many for-profit ventures). Significant differences in financial performance among the strategies were found when controlling for payer reimbursement conditions. Specifically, in an unfavorable condition with high Medicaid and low commercial insurance, the Mission Based strategy performs significantly worse while the Entrepreneur strategy performs surprisingly well, in comparison with the other strategies. CONCLUSIONS: Findings suggest: (a) scope can be used to classify a large number of multibusiness health care firms into a taxonomy representing a small group of distinct corporate strategies, which are recognizable by senior management in the health care industry, (b) no single strategy dominates in performance across different payer profiles, instead there appears to be complementarities or fit between strategy and payer profiles that determines which firms perform well and which do not under different conditions, and (c) senior management of nonprofit health care firms are cross-subsidizing unprofitable patient care through ownership of nonpatient care businesses including for-profit ventures.     

Health Care Reform Hinges on Private-Sector Collaboration

America''s health care system is characterized by rising costs, increasing numbers of Americans who lack health insurance coverage, and poor quality of health care delivery. The convergence of these factors is adversely affecting not only the health of Americans but also the ability of businesses to compete successfully in a global marketplace. AARP and other nonprofit organizations are collaborating with the private sector to have more people covered by health insurance and to educate them to make behavioral choices that prevent chronic disease and ultimately lower costs.     

Regulating stop-loss coverage may be needed to deter self- insuring small employers from undermining market reforms

As implementation of the Affordable Care Act reshapes the US health insurance market, state policy makers should be prepared to revisit regulation of stop-loss coverage-a form of reinsurance-for small businesses. Aspects of the reform law could motivate small businesses to self-insure, rather than participate in state-regulated markets either inside or outside the new health insurance exchanges. If younger or healthier groups self-insure, premiums for insured plans might rise to an extent that could seriously impair the regulated market. States can influence small businesses to participate in the regulated market by making it more difficult or costly to obtain stop-loss coverage, which self-funded employers rely on to protect their businesses from catastrophic medical costs incurred by one or more insured workers. States can limit the comprehensiveness of stop-loss coverage, ban stop-loss coverage outright, or regulate it as they do primary coverage. But states need federal guidance about how to exercise this authority if they are to promote, or prevent the undermining of, important aspects of federal health care reform.     

Concentration in the Greek private hospital sector: a descriptive analysis

Over the last 20 years, governments all around the world have attempted to boost the role of market and competition in health care industries in order to increase efficiency and reduce costs. The increased competition and the significant implications on costs and prices of health care services resulted in health care industries being transformed. Large firms are merging and acquiring other firms. If this trend continues, few firms will dominate the health care markets. In this study, I use the simple concentration ratio (CR) for the largest 4, 8 and 20 companies to measure the concentration of Greek private hospitals during the period 1997-2004. Also, the Gini coefficient for inequality is used. For the two different categories of hospitals used (a) general and neuropsychiatric and (b) obstetric/gynaecological it is evident that the top four firms of the first category accounted for 43% of sales in 1997, and 52% in 2004, while the four largest firms of the second category accounted for almost 83% in 1997, and 81% in 2004. Also, the Gini coefficient increases over the 8-year period examined from 0.69 in 1997 to 0.82 in 2004. It explains that the market of the private health care services becomes less equal in the sense that fewer private hospitals and clinics hold more and more of the share of the total sales. From a cross-industry analysis it is clear that the private hospital sector has the highest concentration rate. Finally, it appears that the market structure of the private hospitals in Greece resembles more closely to an oligopoly rather than a monopolistic competition, since very few firms dominate the market.     

New research alliances in the era of managed care

BACKGROUND: The rise of managed behavioral health care in the United States was accompanied by reductions in costs, which has shifted the policy debate from concerns about rising costs to questions of universal access, mental health benefits at parity with medical benefits and quality of care. To meet these new challenges, managed care organizations, the purchasers of health care and academic services researchers must work together in new ways. AIMS OF THE STUDY: This paper discusses collaborative efforts between a for-profit managed care firm, academia and purchasers of health care coverage to study parity for mental health and substance abuse and how this effort has become part of a research strategy to inform policy. Historical, strategic and methodological issues are presented. METHODS: Case Study. RESULTS: Although the benefits from cooperative research are substantial, there are severe hurdles. Managed care organizations often have data that could answer pressing policy questions, yet these data are rarely used by researchers because it is difficult to obtain access and because analyzing the data requires computing facilities and skills that are not common in health services research. In turn, managed care organizations can learn how to design and implement more informative data systems that eventually lead to more cost-effective care, but there often are more immediately pressing business considerations and sometimes resistance to outside scrutiny. Important features that made this cooperation successful include strong support from the senior management in the company, including complete access to their extensive databases, and established funding for a managed care research center by the National Institute of Mental Health. CONCLUSION: This paper illustrates the potential of collaborative research. New research challenges, such as the linkages between quality and cost-effectiveness in actual practice settings, can only be met successfully if we build alliances among payors, managed care companies and academic researchers.     

Let's merge competitive and regulatory strategies to achieve cost containment

Whether market-driven or government-driven approaches should be used to curtail future health care expenditures has become the debate of the decade on Capitol Hill and in state legislatures. After examining both the competitive and the regulatory models to constrain health care costs, it is argued that to achieve an effective and efficient health care system, a properly structured market-driven approach should be blended with a minimal number of safety and soundness regulations. To successfully implement such a half-competitive, half-regulatory system in the United States, it will be necessary, for example, to empower thirdparty payers and providers to negotiate prices without direct government involvement; to modify enormous regional differences in use rates and health care costs for various treatments with more rigid treatment protocols that are promulgated by the managed care plans; to minimize administrative-type expenditures that have no visible, beneficial effect in improving quality patient care; and to curtail the supply of underutilized health care resources as another means to constrain health care expenditures. These strategies would have significant political, social, economic, and patient care implications for the United States but might result in our health care cost dilemma appearing to the public as finally being "under control."     

Pharmaceuticals--cost or investment? An employer's perspective

Employers are becoming increasingly concerned about rising pharmaceutical costs. Are improved health and cost outcomes achieved as a result of increasing pharmaceutical costs? One should approach this issue with a holistic view that considers the overall impact that disease conditions have on health and productivity. To illustrate, we first identified the "top ten" most expensive physical and mental health concerns facing American businesses, using data from over 60 firms from the 1996 MarketScan Private Pay Fee-For-Service Research Database. For some of these top ten conditions, the literature already addresses the drug cost versus investment issue, with mixed results. For conditions in which uncertainty prevails and for other high-cost conditions, empirical analyses should address the drug cost versus investment issue to minimize the risk of a penny-wise and pound-foolish payment/coverage policy. A similar strategy should be applied to individual corporate diagnostic assessments.