The small group insurance market has remained stable during the pandemic, but long-term concerns remain
The small group health insurance market has remained stable over the past year, despite the uncertainty caused by the COVID-19 pandemic, according to a new report. However, the long-term health of the market remains uncertain, as the number of smaller employers offering health insurance has declined over the years.
The analysis, published by the Urban Institute and the Robert Wood Johnson Foundation, indicates that small businesses generally place a high priority on providing health benefits to their employees in order to attract and retain workers. However, costs continue to rise, putting pressure on small employers.
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“While the market has seen relative short-term stability during the pandemic, researchers say small group insurance costs are rising and the number of small employers offering health coverage is declining, continuing pre-pandemic trends. “, said the Urban Institute in a statement.
Staying stable during the pandemic
The report examined the experiences of employers in six states: Arkansas, Minnesota, Montana, New Mexico, Pennsylvania and Vermont. Although some market watchers predicted that the economic downturn that accompanied the pandemic would lead employers to drop health insurance coverage, the study found that was generally not the case.
“Although small businesses have been among the employers most negatively impacted by the pandemic, respondents indicated that few major changes in offer rates, employer bonus contributions or employee benefits have occurred during the course of the pandemic. of the past year,” the report said. The authors added that employers have indicated they are willing to make sacrifices and do whatever it takes to maintain employees’ insurance coverage. “During the pandemic, we continued to pay everyone’s health insurance, even when they were on leave. It was pretty taxing financially…but people can’t lose their health insurance during a pandemic,” one Minnesota employer said.
The report also noted that the hardest hit segments of the economy, such as retail and hospitality, are less likely to offer insurance in the first place.
Private industry and the federal government have been scrambling to maintain health insurance benefits – the report found that insurers said a number of insurers were providing grace periods for payments and maintaining eligibility workers whose hours had been reduced or who had been made redundant. Insurers have also recorded lower claims than expected during the pandemic, which has allowed them to offer premium discounts in some cases. Additionally, the federal Paycheck Protection Program has been cited by employers as a financial lifeline, allowing them to maintain benefits in 2020.
A need for better long-term strategies
The report highlights that the good news for 2020 is tempered by concerns about the future of health benefits with small employers.
For example, the percentage of small employers offering health insurance continues to decline. The report found that over the past 30 years, the share of employers offering small group health benefits has fallen from almost half of companies in this category to less than a third. Prices also continue to rise; premiums in the small group market have increased an average of 4.5% per year over the past four years.
The report also noted that federal efforts to create new options for the small group market have largely failed to gain traction.
“Market watchers have cited several reasons for this, but policymakers should keep in mind that small employers rely heavily on insurance brokers to help them make health benefit decisions,” the report said. . “Smaller employers are less likely to have a strong human resources department or in-depth knowledge of health benefits, leading them to rely heavily on brokers to learn about new options. Programs or policies that do not encourage brokers and other professionals to promote them are unlikely to achieve much success, at least in the short term.