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Study: Small Business Owners Dissatisfied with Insurer Services

By Ben Weyl, CQ Staff

October 16, 2008 -- A new report by the PricewaterhouseCoopers Health Research Institute shows that small business owners are not nearly as satisfied with insurer-provided services as large employers and have needs distinct from large companies that are not being met.

Small employers were less satisfied than large employers on all 12 areas of service that were studied, according to the report, including the accuracy and timeliness of claims, wellness programs, and the use of technology such as personal health records. While large employers' satisfaction levels remained above 50 percent on all but one of the 12 areas, small business owners' approval dipped below 50 percent several times. The institute classified businesses with fewer than 250 employees as small; large companies were those with an average of 8,000 employees.

One reason small businesses owners may be less satisfied is the higher costs per employee usually ascribed to small groups, according to the report.

"Small employers could be the canaries in the coal mine for the employer-based model," Michael J. Thompson, principal of PricewaterhouseCoopers' human resources services group, said in a news release.

Both small and large employers ranked the accuracy and timeliness of claims as the service most important to them, but small employers are less satisfied with its delivery. Nearly one of four small business owners said they were dissatisfied, according to the report, while just 14 percent of large employers were dissatisfied with their insurance provider.

The biggest gap in importance between small and large employers was the inclusion of wellness programs to their insurance plans. While nearly 80 percent of large employers said wellness programs were important, only half of small employers did so. Neither group, however, is particularly satisfied with the wellness programs they have. Roughly one of four large employers was dissatisfied with their wellness programs and nearly twice as many—50 percent—of small employers said they were dissatisfied, according to the report.

Neither small nor large employers view the use of technology and, in particular, personal health records, as highly important, despite the increasing fanfare personal health records have received in Congress and elsewhere. Just 27 percent of small business owners and 39 percent of large employers said personal health records were important to their plans. Furthermore, neither group is highly satisfied with their use, "an indication that there is a lack of understanding of how online tools contribute to a wellness strategy," the report notes, "an area on which large employers place a great deal of importance."

About two-thirds of employers, large and small, said they would willingly accept less customized plans if it would reduce costs, the report found. Small business owners, however, said they would require a greater reduction in fees to make it worthwhile—a minimum of 10 percent, according to the report, compared with as little as 3 percent for large employers.

The report, the institute suggested, should help guide insurance providers as they seek to strengthen the employment-based health insurance system at a time when it has come under increasing strain.

"Given that the majority of American workers are employed by small business and that the erosion of health insurance coverage is among small employers," Thompson said, "insurers are keenly interested in understanding what all employers want and how they can adapt plan designs and service offerings to better meet their needs."

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