As healthcare costs continue to rise, smaller businesses are particularly vulnerable to the pressure, according to a new Morgan Health report.
For example, among employers with 50 or fewer employees, 30% said that healthcare costs are worsening their business situation, compared to 22% of employers with a greater number of employees. Because these smaller firms are not required to offer coverage, they may choose to adapt to the costs by dropping benefits altogether.
However, despite these challenges, many (71%) of the 1,023 small- and mid-sized businesses surveyed for the report have taken steps to keep benefits intact as much as they can. Initiatives include rolling out wellness programs, adjusting costs elsewhere or shifting addition expenses to employees, with fully eliminating benefits largely viewed as a last resort.
The smallest employers have the least wiggle room to deploy those options, though, which is why they may be the most acutely impacted by the cost pressures, said Molly Chidester, deputy director of healthcare innovation at Morgan Health, in an interview with Fierce Healthcare.
"Businesses with under 50 employees are really feeling the effects of these increases—more so than their larger employer counterparts—but have fewer levers in how to respond," she said.
Most of the businesses surveyed said they were interested in potential alternatives that could support them in managing costs, but they lack key information about how these models work or how best to implement them.
Eighty-five percent of those surveyed said there were likely viable options they had not yet explored, and 78% said that new information could lead them to make different choices around benefits. However, 77% said they fear that the disruption or uncertainty of pursuing alternatives could outweigh the cost benefits.
Chidester said that transparency into both what their current costs look like and how new models could impact their expenses is hard to come by, which can add to these businesses' reticence.
"There's an appetite for something different, but just a lot of unknowns on what that change might mean for them, and so I think many of them are hesitant to then make the switch," she said.
The desire for greater transparency also drives interest in digital technologies and artificial intelligence, with 89% saying they would invest the time necessary to learn new tools if that would make it easier to choose a plan. In addition, 75% of those surveyed said that AI would likely make them less reliant on outside help.
Despite the potential, just 12% of small businesses said that AI or chat tools are among their commonly used decision tools.
"If you're living in a world where you think, 'My option is either fully insured or self-funded,' moving to self-funded is a big leap for a business," Chidester said, "and so we need to do more to educate them on these intermediate steps that could help them make some sort of change."
The survey also found that while small businesses still view brokers as key partners, but concerns about pricing and financial incentives are complicating those relationships. More than half of those surveyed said they currently work with or are considering a broker, with 20% switching to a different one and 53% considering a switch.
Fifty-one percent said that a lack of transparency into broker payments makes them feel less confident about decisions.
Ultimately, small businesses need to be armed with the data necessary to make informed decisions about benefits and cost management, as support the team at Morgan Health is aiming to provide, according to the report.
"I think what we'd like to see more of is the types of data transparency and comparison tools, tools that can be put into the hands of business owners to help them better shop and compare their options and understand what implications it may have," Chidester said.