A recent New York Times article entitled Dropping Health Plans, to Pick Better Coverage makes a pretty good case for small companies dissolving their group health plans so their employees can get a federal subsidy through the Healthcare.gov or state-based exchange websites.
This idea isn’t new at all – McKinsey and Company predicted a movement from group to individual coverage back in 2011, and Health Partners America has been educating agents about this coming trend for the past few years. But any time a major media outlet like the New York Times discusses a story like this, it seems to give it some legitimacy. The article may be a good tool to help agents explain the new trend to their clients.
Here are the high points of the article, which includes quotes from several insurance agents, including NAHU president Tom Harte:
- When they do the math, some employers will find that their employees actually come out ahead if they drop their group plan and let them buy individual policies through the new federal and state marketplaces.
- When employees get to make the choice about which plan to buy, it also eases the burden on employers – they no longer have to pick a one-size-fits-all solution for a diverse workforce.
- The Affordable Care Act, which does not require employers with fewer than 50 employees to purchase group health coverage, allows these small companies to “wash their hands of one of their most expensive business problems.”
- This is something that the agents quoted in the article say their clients are asking about and, increasingly, a strategy they’re actually adopting.
- The decline in small group health coverage isn’t a new phenomenon. As the article points out, “38 percent of American companies with fewer than 50 workers provided health insurance” in 2011, “down from 47 percent a decade earlier.”
- While in the past there may not have been many good options for employees whose employers don’t offer group health coverage, this will change in 2014. Not only are all plans guaranteed issue next year, federal subsidies are “available to those who earn up to four times the federal poverty level, about $46,000 annually.”
This is all stuff you already know – or at least you should. But not everyone does, so the more stories like this that are out there, the more it will seem like the thing to do. Just think about the attention the Wall Street Journal article about skinny plans got a few months ago.
Marketing material is useful in getting people’s attention, but news stories help convince employers that they’re not the only one – that the solution their company is considering is part of a new and growing trend. So watch the newspapers – right now there’s no shortage of useful stories, from ones about the problems with the Healthcare.gov website (which help you prove that your private exchange site is a better option for their employees) to ones about fraudulent navigators (which help you explain the value of a licensed agent) to ones like this New York Times article about small employers dropping their group health coverage.
This strategy, of course, won’t be right for every small company, but you also don’t have to convince every small employer for it to be profitable – there are already more companies that don’t offer coverage than do offer coverage, and the number who don’t is growing every day.