Employee Benefits - Choosing a Group Health Plan

Choosing a group health plan

When it comes to buying health insurance, there's strength in numbers. That's why 70 percent of Americans get their health insurance through their employers. And that's why larger companies enjoy a better bargaining position than their smaller counterparts when it comes to selecting an employee health plan.

Because a health insurer is more likely to sit up and take notice when a large employer is on the other side of the bargaining table, businesses have begun to band together into " purchasing pools," or coalitions that use their collective clout to negotiate more successfully. Two trade groups in Washington, D.C., serve as umbrella organizations for these purchasing pools. The National Business Coalition on Health (NCBH) is made up of larger employers who team up for better bargaining power and the National Federation of Independent Business (NFIB) represents small employers who, in many cases, may be struggling to find any affordable health plan.

"Small businesses would love to be able to have the flexibility that large ones have, " says Jim Weidman, spokesman for the NFIB. He notes that they're often at the mercy of "off-the-shelf" policies with little flexibility, whereas larger, self-funded company benefit plans that aren't subject to state regulation can tailor their offerings.

"Small businesses focus on cost because they're buying an insurance product through the state-regulated market," says Karen Hertz, director of member services for NBCH. Her organization is made up of regional coalitions of mid-to-larger-sized employers.

Unlike smaller businesses, where availability is still the key issue, larger businesses can concern themselves more with the quality of care they're offering their employees. "A lot of our members are involved in health care quality-improvement initiatives," Hertz told insure.com. "A coalition makes better bargaining power." Using their collective clout, they can request information from different hospitals and care providers to get a sense of the quality of care offered.

Decisions, decisions

Regardless of whether you're a small company or a large one, you'll want to make sure you're getting your money's worth out of a health plan. Kevin Haugh, a spokesperson for the Institute for Health Policy Solutions, an organization that helps purchasing cooperatives look for health plans, offers some shopping tips.

"First start by seeing if there's a group-purchasing arrangement out there. You can benefit from the power of group purchasing if you can find one of those organizations," he says. Trade associations and local Chambers of Commerce will often have collective-bargaining entities for health insurance.

"Reputation is key," says Haugh. "You can learn a lot just by talking to your medical providers about a health plan." While doctors may have different concerns when it comes to dealing with health plans, they will have a good sense of how user-friendly one will be. It's also a good idea to talk with similar-sized businesses about their choices � about both plans they're using and plans they're not.

Small businesses will often go through an agent or a broker for a health plan. Haugh cautions them to do a little digging first to uncover the agent's motives. Is the plan you're buying the best one for your company or the best one for the agent? If an agent recommends a particular company, be sure to ask what percentage of business he or she places with that company, and why. Find out how many plans the agent represents; if it's only one or two, you may need to do more shopping. Haugh warns that going to more than one agent at a time can get messy, though, since your company's information may be submitted more than once to an insurer.

Be sure to use your local department of insurance as a resource as well. Some states have health plan shopper's guides. And every state should be able to tell you whether an agent, broker, or insurance company has had any complaints filed against them. 

What are those credentials worth?

Many employers will do business only with accredited health plans. While accreditation status can be important, it's not necessarily a foolproof way of determining quality of care. The accreditation process itself is still fairly new and often requires health plans to compile a large amount of data. "A smaller plan may meet the standards [for accreditation] but doesn't have the infrastructure to prove it," says Haugh. Health plans with deep pockets are more likely to be able to spend the money on computer tracking systems necessary for the accreditation process.

An Oct. 19, 1998, article in the Wall Street Journal also challenged the significance of both the accreditation programs and the HMO-ranking programs that have sprung up in the past few years. The article recounts how the Joint Commission on Accreditation of Healthcare Organizations backed away from a set of standardized performance measures for hospitals in 1994, instead offering a system that allowed hospitals to highlight their own specialties. The current system, in place since 1997, allows hospitals to choose among 2,500 different measures to track performance.