JCNF Op-EdAppeared in Real Clear Health on March 6, 2024By Russ Carpel

Out-of-the-Box Thinking Can Help Small-to-Mid Sized Businesses Attain Affordable Healthcare for Employees

The U.S. is home to a thriving small business community. From restaurants to manufacturers, these enterprises employ more than 60 million people. However, the dream of running a small business and providing benefits for staff is often harder than it appears. For example, small-to-mid sized businesses face huge financial hurdles when trying to attain quality, affordable healthcare for employees.

Americans shouldn’t rely on federal reforms in Washington—which is frozen by partisanship—to improve the situation. Entrepreneurs can and should take matters into their own hands.

Unlike their larger counterparts, Main Street businesses rarely enjoy the negotiating power and financial resources to effectively navigate the complexity and expense of the U.S. healthcare system. The disparity can weaken the competitiveness of small-to-mid sized businesses to hire new employees as well as kneecap efforts to provide existing staff health plans at affordable prices.

The crux of the problem is the spider web-like nature of the healthcare system. It’s characterized by dense layers of middlemen, government regulations, insurers, and large hospital networks that contribute to eye-popping price tags. Since 2000, healthcare expenditures per American have nearly tripled. It’s a runaway train that is a drag on businesses, employees, and the U.S. economy.

The entrepreneurial spirit that drives small business owners to launch and grow their businesses can also guide them in finding creative workarounds to the healthcare dilemma.

One forward-thinking idea that will help is implementing health savings accounts alongside direct primary care. Health savings accounts provide the framework for employers and employees alike to contribute to healthcare costs. Meanwhile, direct primary care gives patients access to basic healthcare services for a modest monthly charge—similar to a gym or streaming service subscription.

The best part is that the healthcare alternative bypasses traditional insurance. It provides a path for small business workers to access medical services—ranging from primary care to catastrophic coverage—that fit their unique circumstances at a fraction of the cost.

Exploring alternative insurance programs is another option. Small-to-mid sized businesses can access hybrid coverage that essentially mixes the concept of a traditional group health plan with a form of self-insurance, typically known as “Level Funding.” In short, employers pay the medical claims of their own staff rather than an insurance company. But to provide peace of mind, there is a backstop to protect employers if costs go beyond a predetermined limit.

Translation: Under this model, many small businesses can extend health benefits to employees at a much more affordable price.

And as an added benefit, these alternative approaches empower employers and employees alike to circumvent the big drug supply chain middlemen that significantly jack-up the cost of prescription drugs. Pharmacy Benefits Managers (PBMs) help to get medicine from point “A” to point “B,” however just three of them control 80 percent of the market—consolidation that leads to inflated price tags.

The reality is there are dozens of other options that can offer much more competitive medicine prices. Self-funded employers should be educated and empowered to shop around. In doing so, small-to-midsize employers can save six to seven figures immediately on prescription costs for their employees annually.

The U.S. healthcare system—plagued by middlemen, bureaucracy, government red tape, and entrenched interests—gives large corporations the upper hand when shopping for employee health coverage. But with some out-of-the-box thinking, there’s a path for small-to-mid sized businesses to attain quality, affordable healthcare for their workers as well.

Russ Carpel is the CEO of LevelFunded Health. He is also a partner of the Job Creators Network Foundation.