When 20 of the largest companies in the U.S. band together to try to secure cheaper health care for workers, you know something potentially important is brewing.
American Express, Coca-Cola, IBM, Macy's, Shell Oil, Verizon Communications and other large companies have joined forces to share data on patient outcomes and to get greater transparency on costs, as well as to exert pressure to lower the costs of care and prescription drugs. The coalition of companies represents 4 million employees, according to The Wall Street Journal.
Even with the Affordable Care Act promising expanded insurance coverage and lower premiums since 2012, the biggest companies are still caught in an environment of rising costs. While the concerns of these giants may seem far removed from your startup, you should still take note of their new alliance: It's likely something similar will be coming for small businesses.
And it could even be as soon as later this year, when companies with 50 employees or more are expected to comply with the ACA's employer mandate to offer qualified health care plans, or face tax penalties.
Small companies currently have access to a federal exchange, called SHOP, that leverages their combined purchasing heft to buy plans. But the large company model could percolate down to create an additional option for entrepreneurs.
"What's interesting for small businesses is that similar pools could come from trade unions and trade guilds and business associations," says Bruce Bachenheimer, a professor of clinical management at Pace University. In addition to small companies banding together, Bachenheimer adds that other types of pools also could form, for example within the growing ranks of the self-employed in the so-called gig economy, represented by Uber and TaskRabbit. Even startups that bring together entrepreneurs, such as WeWork, could also present large pooling opportunities.
There are concerns about the sensitivity of data that companies exchange and how they use it, Bachenheimer says, as well as whether these pools will really provide cost savings, as the WSJ suggests. Further, regional nonprofit co-ops that have relied on more limited networks of health care providers have struggled to remain solvent over the years, in large part because they have attracted a preponderance of older workers who need more care.
Yet cooperative networks that service startups would tend to have younger workers, and could have a better chance.
"It will never make economic sense until younger, healthier employees join in," says Bachenheimer. "These plans could be catered to young, tech workers."