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Cost of health care continues to hit small businesses hard

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Employers continue to search for a way to control health care costs in the state, repeatedly telling the New Jersey Business & Industry Association that it's their biggest concern.

About 85 percent of employers offer health benefits, with 83 percent saying they continue to do so to attract and retain workers, according to NJBIA’s Health Benefits Survey.

The lack of choices in health plans for small employers is something the health industry is aware of and focusing on.

At an event of the New Jersey Association of Healthcare Underwriters last week, a panel of insurers spoke about cost control and new ideas being introduced in New Jersey to help with it.

The state’s largest insurer, Horizon Blue Cross Blue Shield of New Jersey, reviewed the response to its first year of a new tiered network plan in the Affordable Care Act Marketplace.

AmeriHealth New Jersey, which operates under Independence Blue Cross in Philadelphia, has also had a tiered plan since 2013.

Both are the only remaining players in the marketplace.

Meanwhile, Medicaid expansion in the state has been useful to some, and there are companies that are helping businesses identify which of their employees are eligible.

United Healthcare in New Jersey recently rolled out a new self-funded option for very small businesses, and will expand it to include businesses with as few as five employees on Nov. 1.

It offers a new choice to a segment of the small group market that proves riskier for insurers. The name of the game is volume: The more people paying into the premium pool, the better prepared a business is to cover health care costs.

At small businesses, where there are 24 or fewer employees, health benefits are offered only 76 percent of the time, according to NJBIA’s survey.

“The results of our survey present vivid evidence of how important it is to businesses to offer employees health benefits,” said NJBIA CEO and President Michele Siekerka. “While costs are still a significant issue for our members, they are taking the steps they have to take to aggressively recruit and retain their employees.”

And to manage the costs, employers are using a variety of tactics.

Freezing wages, lower profits, losses, and delaying or reducing business investments are just some of those tactics.

One of the increasingly popular tactics is shifting the cost to the employees.

Employers surveyed by NJBIA said they now pay 74 percent of health insurance premiums and 48 percent for dependent coverage.

The figures represent a slight shifting of costs onto employees since 2014, the last time the survey was conducted, when employers reported paying 79 percent of the cost of health insurance premiums and 50 percent for dependent coverage.

New Jersey Association of Health Plans President Ward Sanders said the small and individual plans don’t have as much freedom as large group plans in pricing and plan design, which is why the employers are feeling the strain.

Federal laws and state laws regulating the industry create a more rigid structure for the smaller plans.

“Small employers feeling the economic crunch are increasingly … migrating to plans with higher deductibles,” Sanders said.

Which is why the industry has replied with tiered networks as one option.

“While it has a higher deducible, (savings are seen by) steering folks to smaller cost sharing for certain services for preferred providers,” he said.

In the tiered networks, the top tier is deemed a preferred network due to lower out-of-pocket costs for the members. This is paired with lower negotiated prices and savings for the insurer and business.

The NJBIA survey found that there has been a 10 percent jump, from 24 percent in 2014, in businesses offering high-deductible plans.

The use of voluntary benefits is also rising, as some 63 percent reported offering dental benefits, up from just 46 percent two years ago. Vision benefits are up from 26 percent in 2014 to 47 percent currently and employers are also offering more options for flexible spending and health savings accounts than they used to.

Most recently, a bill from the state Assembly outlined a public health option that would benefit all New Jersey residents.

The advocacy group Small Business Majority is focused on the health care dilemma and its members would support a public option, according to CEO John Arensmeyer.

He said small businesses are open to any solution at this point.

“Contrary to popular belief, most are not idealogically debating the source (of health care plans),” he said. “They are just looking for the best product at the best price.”

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Write to the Editorial Department at editorial@njbiz.com

Write to the Editorial Department at editorial@njbiz.com

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