Purchasing Health Insurance

1. 1

   Forty-seven (47) percent of small employers offer employee health benefits of which 36 percentage points offer insurance to all or most full-time employees, 5 percentage points offer insurance to some or a few full-time employees, and 6 percentage points offer premium reimbursement to employees who purchase health insurance on their own. Thirteen (13) percent purchase other employee health benefits. However, most of these purchases are made by small employers who already offer health insurance and are complementary rather than in lieu of insurance benefits.

2. 2

   Excluding those who switch insurers or go out of business, very few small employers drop health insurance — about 1 - 2 percent of the population annually. The reason for stagnation or decline in the number of small businesses offering employee health insurance, therefore, appears to be that owners of new firms are increasingly reluctant to offer it.

3. 3

   The owner or a designee shopped for employee health insurance on behalf of 48 percent of small, employing businesses in the last three years. Representatives of larger, small businesses were substantially more likely to shop than representatives of smaller ones. Those who already offer employee health insurance were substantially more likely to shop than those who offer none.

4. 4

   The owner or manager is the person most likely to shop on behalf of the firm for employee health insurance (46%). Twenty–three (23) percent delegate the task to an employee and 27 percent delegate it to an insurance agent or broker.

5. 5

   Small employers shopping for employee health insurance contacted (searched) the following potential sources: the Internet (24%), a network of health care providers (48%), government (16%), business organizations or trade groups (34%), and insurance agents and/or brokers (87%).

6. 6

   Seventy-one (71) percent offering employee health insurance purchased it most recently through an insurance agent or broker, 11 percent directly from an insurer (not over the Internet), 8 percent through a business organization, 5 percent directly from a network of providers, 2 percent through or from government, and 1 percent directly from an insurer over the Internet.

7. 7

   Small employers rely heavily on agents or brokers for guidance on health insurance matters. That does not always serve them well. Agents/brokers, for example, did not raise the subject of Health Savings Accounts (HSAs) in 59 percent of cases involving their discussion of employee health insurance with small employers.

8. 8

   Most small employers directly affected by “pay or play” legislative proposals would adjust primarily by altering the terms of employment. The treatment of part-time employees would have a significant affect on the small business response.

9. 9

   Forty-three (43) percent of small employers offering employee health insurance (or premium reimbursement) spend 7.5 percent or more of payroll on employee health benefits. That figure translates into about 20 percent of all small employers who allocate at least 7.5 percent of payroll expenditures to employee health. About 5 percent spend 15 percent or more of payroll.

Volume 7, Issue 3, 2007
ISSN 1534-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 1Which BEST describes your current business situation? You:?
• 1aDid you start offering employee health insurance in the last three years OR did you offer it before then?
• 1bThough you don't offer it now, did you offer employee health insurance at any time in the last three years?
• 2Regardless of whether you purchased it or not, did you or someone on your behalf shop for employee health insurance, either for a new or better plan, at any time in the last three years?
• 2aSince you have employee health insurance, but didn’t shop for any in the last three years, did you:?
• 3Think of the last time you shopped for employee health insurance. Who did the shopping?
• 3aIn hours, about how much time did you spend shopping? For example, how many hours did you spend learning about different plans, analyzing options, making inquiries, determining employee needs, etc.? An estimate is fine.
• 4What was the primary reason you or your business shopped? Were you or your business looking for a:?
• 5Think of the last time you or your business shopped for employee health insurance. Did you or your business explore options for purchasing employee health insurance on the Internet?
• 6The last time you or your business shopped, did you or your business explore options directly with a network of health care providers, such as an HMO?
• 7The last time you or your business shopped, did you or your business explore options in a government-organized or sponsored small-business health insurance program?
• 7aWhy didn’t you consider a government organized or sponsored small-business health insurance program? Was it because you:?
• 8The last time you or your business shopped, did you or your business explore options through a business trade organization or association?
• 9The last time you (purchased/shopped) for health insurance did you discuss options with an insurance agent or broker?
• 9aWith about how many DIFFERENT agents or brokers did you discuss your employee health insurance options?
• 10Which best describes what happened when you discussed purchasing employee health insurance with the agent or broker?
• 11Did the agent or broker thoroughly explain Health Savings Accounts or HSAs as a health insurance option?
• 11aDid you bring up the subject of Health Savings Accounts or did your agent or broker?
• 12As you consider what to do about employee health insurance, did you talk to your employees about a health plan, the financial trade-offs involved, or other relevant health insurance issues?
• 12aWhat was your general sense of what your employees most wanted in health insurance? Was their priority:?
• 12bWhat was the most important reason you didn’t ask?
• 13Did you eventually purchase your employee health insurance:?
• 13aWas the government directly or indirectly involved in your purchase, such as sponsoring or organizing the plan, matching you with an insurer, etc.?
• 14Excluding health insurance and premium reimbursements, do you provide full-time employees any type of health benefit, such as reimbursement for certain health care expenses, membership in health clubs, paid screening for specific health conditions, or things of that nature?
• 14a(health benefit) What do you offer?
• 15Do you spend 7.5 percent or more of your payroll on employee health, counting any health insurance you offer or other health-related employee benefits you provide?
• 15aDo you spend 15 percent or more of your payroll on employee health, counting any health insurance you offer or other health-related employee benefits you provide?
• 16Do you have ONLY part-time employees?
• 17If such a proposal became law, what would be your first step to comply with it? Would you:?
• 18Would you take a second step to help you comply? Would you:?
• 19If the law required you to either purchase health insurance and pay 60 percent of the premium for your full-time employees OR pay an additional 7.5 percent tax on payroll, which would you choose?