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The economy in the United States is at a point where insurance premiums are rising at a higher rate than inflation. As small business health insurance costs increase, employers are left with no choice but to shift the financial burden to their employers.
Employees are forced to decide how to structure the payments. Some prefer to pay a higher premium in exchange for a lower deductible. Others will opt for a lower monthly payment with a higher deductible. The hard part is comparing quality of care versus cost. Consumers faced with this decision should consider the following facts.
1. Health care costs and the level of care will vary from provider to provider even when they operate within the same market or network.
2. Many consumers find it difficult to understand how premium prices and level of care are related.
Most providers will craft their policies to include language that is often confusing to the average consumer. There is no incentive for them to provide a transparent pricing structure that most people can understand.
Unfamiliar terms like contracted pricing, global pricing, reasonable charges and customary charges confuse the issue even further. Visiting a physician working within the network is less expensive than going outside the network. Every policy is different and this makes it difficult to directly compare coverage and prices.
3. In companies where the employer is responsible for partial payment, employees care less about how much health insurance costs.
Employees responsible for contributing to their own health care costs have more incentive to comparison shop when choosing a provider. They pay more attention to the association between affordable rates and quality care and become more willing to make choices that save money for the employer and employee.
This looks good on paper but shopping for insurance in the real world is a little bit different. Consumers shopping for something like an automobile have access to reliable date comparing cost to quality. The same is not true when comparing insurance policies. This information is not readily available and consumers tend to believe the most expensive plan provides the best care. If the employer is paying for it, there is no hesitation in picking the plan that costs more.
There are things an employer can do to guide employees in evaluating the limited data that is available.
1. Local medical facilities and area doctors should be made aware the plan is devised to favor the most transparent price structures.
2. Employees need to be presented with the various choices and the costs associated with them. Offer an overall plan structured to favor those options with contracted pricing data.
3. Meet with employees regularly to discuss the health care options and various ways to control costs.
Implementing the above mentioned points will help educate employees about what affects the costs of small business health insurance.
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