No small businessman knows better than a boat dealer how difficult it has been to provide health insurance for employees. The costs have been nearly unmanageable. But after living through many brutal premium increases in recent years, the tables appear to be turning and there may even be a price war at hand in the health insurance business.
As Joe Weber recently reported in Business Week, the overall market for health insurance is decidedly flat. As a result major insurance companies are engaged in stealing market share from one another.
For example, Aetna, Cigna and Humana are after more of the small and midsize companies that buy group policies (dubbed the “fully insured” market) to cover their employees. This market is more profitable than the large corporations that self-insure and just hire insurance carriers to run their plans for them.
To make things even more interesting, UnitedHealth Group, the second-largest U.S. insurer, has found itself enmeshed in a scandal for backdating stock options for its former CEO. That makes it somewhat vulnerable to competitors and UnitedHealth has said it expects to lose more than 500,000 customers this year.
Local Blue Cross & Blue Shield plans are even bigger targets. Right now, the Blues dominate the lucrative “fully insured” market. What’s more, some of the Blue plans have announced steep increases for coverage this year, apparently unaware they should be circling their wagons and preparing to be attacked. After all, top executives at Cigna and Humana have made no secret of the fact that they see the “very competitive” conditions create opportunity! For example, after years of serving primarily the big-company market, Cigna has said it plans to expand more into the individual and “fully insured” markets this year. “We need to be price-competitive,” says Jon Rubin, chief financial officer of Cigna HealthCare, sending a clear signal that Cigna’s pricing will be aggressive.
The good news in all this is that, for the first time in recent memory, we in the small businesses world may be in a position to demand a better “deal” on our current health insurance plans, or it’s an opportune time to consider changing carriers. It’s worth checking out.