Small businesses use aggressive tactics to keep benefit costs down

Scroll down for text

Small and mid-sized employers (10–999 workers) saw average health-benefit-premium increases of 9.2 percent last year. Marsh Inc. reports that these companies aggressively blunted the effects of fast-rising health care costs, using out-of-pocket cost-sharing options — such as replacing copayments for prescription-drug coverage with coinsurance — and by moving away from open-access-style plans and back to more-tightly controlled HMOs. The share of small and mid-sized employers offering HMOs jumped 15 percent last year, while participation in other types of benefit plans fell.

Higher copayments, yes, but payroll deductions? No!

One technique not heavily used by the smallest employers (3–199 workers) to minimize costs is making employees pay a portion of the monthly premium, according to a new Kaiser Family Foundation/Health Research and Educational Trust report. While intuitively it seems that smaller purchasers would want employees to bear some up-front costs of offering coverage, most do not (interestingly, recent published studies suggest that out-of-pocket cost-sharing strategies are more effective in controlling utilization than payroll deductions). In contrast, at larger companies, payroll deductions are a way of life.


Career Opportunities

HAP, a subsidiary of Henry Ford Health System, is a nonprofit health plan providing coverage to individuals, companies and organizations. This executive develops strategies to meet membership and revenue targets through products, pricing, market segmentation and advertising.  Aligns business among Business Development, Commercial Sales, Medicare and Public Sector Programs and Product Development. Seeks to enhance and be responsible for business development and expansion through the development of an effective product portfolio, strong interpersonal relationships and service excellence.

Apply via email to or online at

Subscribe to Our Newsletters

Monthly table of contents

Be notified as each issue of Managed Care is available online.

Biweekly newsletter

Recent topics have included:

PTCommunity news

New drug approvals, clinical trials, drug management. Three times per week.


Managed Care
By Peter Wehrwein
Managed Care
By Howard Wolinsky