Navigating health insurance as a small business owner is tough enough, but when it results in gaps in care for employees, the challenge becomes even more daunting. Traditional group health insurance often causes disruption in continuity of care, which can negatively impact both health outcomes and employee satisfaction.
A personal experience made me realize just how broken the system can be. After a boating accident left me needing surgery for a tendon injury in my finger, I ended up facing not just physical rehabilitation, but also a frustrating journey through a changing insurance landscape. Despite being at the same job, the health plan was switched three times in the 18 months I was receiving treatment, leading to multiple rounds of paperwork, finding new providers, and wasting precious time.
This example highlights a larger problem in the U.S. healthcare system, one that is deeply tied to employment: employees experience constant disruption in their healthcare as they change jobs or face frequent shifts in coverage plans. So, what does this mean for small businesses, and how can they avoid creating the same issues for their employees?
The Impact of Disrupting Continuity of Care
Continuity of care refers to the ongoing relationship between a patient and their healthcare providers. When patients have consistent access to the same healthcare team, they are more likely to experience improved health outcomes. This consistent relationship results in better follow-up on medical advice, more thorough care, and greater trust between patients and doctors. In fact, studies have shown that adherence to treatment is nearly three times higher when patients have a solid relationship with their primary care provider.
Yet, continuity of care is becoming increasingly rare in a healthcare system where employers dictate which providers employees can see. The constant disruptions caused by changing insurance networks, especially with frequent job changes, result in a lack of long-term relationships with healthcare professionals.
Why Continuity of Care is Becoming a Challenge
Over the years, employment dynamics have changed significantly. The average employee now stays at a job for just about four years, with younger workers (ages 25-34) having even shorter tenures. In 2022 alone, 51 million Americans quit their jobs, and millions more were laid off. The flexibility of job hopping is both a sign of a thriving economy and a reflection of the increasingly unstable relationship between employment and health insurance.
Additionally, insurance networks are shrinking. The trend toward “high performance” networks—intended to cut costs—has resulted in fewer providers being included in the network. For employees who switch jobs, this often means they lose access to their trusted healthcare providers. For small businesses, the lack of flexibility in offering multiple plan options compounds the problem, as employees may find their favorite doctor is no longer covered by their new employer’s plan.
The Role of Employers in the Problem
Small business owners are caught between the rising costs of health insurance premiums and the desire to provide good care to their employees. Many small businesses only offer one health plan, which means employees are left to adjust when a new plan or narrower network is introduced. The pressure on employers to reduce costs, particularly with premiums increasing annually, leads them to constantly switch plans or change their coverage options.
Between 2019 and 2021, a significant number of small businesses switched to level-funded plans or pursued self-funding options through Professional Employer Organizations (PEOs). But, as premiums are based on previous years’ health claims, any one expensive claim can drive an employer to change plans again the next year, disrupting continuity of care for employees.
The Nomadic Nature of Healthcare
The increasing frequency of job changes and employer-driven plan switches makes it difficult for employees to maintain meaningful relationships with their healthcare providers. When employees move between networks, they lose context for their ongoing health needs, and the administrative burden of filling out forms and re-establishing care becomes an added frustration. The result is often lower-quality care and higher costs for both employees and employers.
A Way Forward: How ICHRA Can Help
While the system may feel like it’s spiraling out of control, there is hope. The Individual Coverage Health Reimbursement Arrangement (ICHRA) offers a promising solution. With ICHRA, small businesses can provide employees with pre-tax money to purchase their own insurance from the marketplace. This allows employees to choose a plan that works best for them, maintaining continuity of care without the disruptions caused by changing networks.
By offering ICHRA, small businesses can simplify the administrative burden and give their employees the freedom to choose their healthcare providers, ensuring better care and more consistent health outcomes.
In the end, the hidden cost of traditional group health insurance isn’t just the rising premiums—it’s the negative impact on employee health that comes from the discontinuity of care. Moving to a more flexible system like ICHRA could be the answer for small businesses aiming to provide better, more reliable health coverage for their employees.
