For companies in Texas and especially high growth areas like Dallas, Houston and Austin, any problems that exist now are likely to increase. The reason? An aging workforce and a projected high percentage of people moving to Texas will mean more demand for workers. With classic supply and demand rules, that is likely to mean competition.



Employers who want to win the race for workers are looking at all the tools available to them, including benefits. With a high percentage of workers in Texas currently without health insurance (the Lone Star State has the highest in the nation at more than 24%), small business owners (those with fewer than 10 employees) have a challenge ahead.

Still, many small businesses, even without the resources to offer group health insurance coverage, are discovering workable options, among them membership in small group health insurance plans for as few as two employees.

The questions many employees will be asking are how much will the plan cost and how much of the premium will be paid for by the business. For many businesses, at least a portion of the plan is paid for by the company. Increasingly, however, employees are being asked to pay a higher percentage of the cost, and sometimes for less coverage.

Clearly, the decision of how much a business will pay is up to the owner or manager. However, in an environment where skilled and experienced workers are at a premium, health care coverage could become the one factor that has an employee choosing one job offer over another.

While there are numerous options available to businesses, the choices come down to three basic types of health insurance plans -- managed care, preferred provider, and fee-for-service.

Under managed care, the health insurance company has entered into agreements with certain providers -- doctors, hospitals, and others -- to offer a range of services to members at a reduced cost. These plans are known as Health Maintenance Organizations (HMOs) and also as Individual Practice Association (IPA) or Point of Service (POS) plans.

The financial benefit to consumers is that most HMOs minimize the out-of-pocket expenses paid for medical care, as long as the employee uses the plan's own doctors and facilities. Go outside of the network and patients might end up paying the entire bill.

Members are also required to choose a primary care physician, and see that person first whenever they need medical attention, with the doctor then making the necessary referrals to specialists (who are also under the HMO). Another benefit to the employee is that the per-visit or annual deductibles are usually lower than with other plans.

In a Preferred Provider Plan, also known as PPOs, the health insurance company has negotiated price discounts with health care providers and, if those services are used, they are reimbursed at a higher percentage than if the patient goes elsewhere. One difference is that PPO members can see doctors without first getting a referral. They can also use doctors outside the network if they are willing to pay a higher fee.

For an employee using a PPO, however, the cost is generally somewhat higher, even for doctors within the network.

Under a Fee for Service plan, also known as indemnity plans, employees can choose their own health care providers, giving them a wider range of options. The plans tend to be the most costly, however, largely due to the fact that members do not have the incentive to use lower-cost providers. Some insurance companies counter that by imposing low maximum benefits and/or fee schedules.

Employers owe it to themselves to take the time to select not only the right group health plan but also the right insurance carrier as well. Service is likely to be a factor that impacts the employees' satisfaction, and these are the very people a business owner is trying to attract and retain. Experts suggest looking for an insurance company with a good network of health care providers, timely claims service, and relatively stable premiums. Wise employers will also tap into their own network of fellow business owners.

Employers can take other steps to make sure they are doing all they can to attract and retain employees who care about health insurance. A good first step would be to survey employees as to what they need or want when it comes to health insurance. Once those needs are clear, a business owner could work with a health insurance company to design a plan that includes employee contributions towards cost and keeps employees informed of health care costs and rate changes.

On an ongoing basis, employers can take a role in helping to educate employees about healthy lifestyles and how to reduce the overall cost of health insurance. That might include communicating with employees about the specifics of the health insurance plan, the emphasis being on what is, and what is not, covered.

Employers can also encourage employees to avoid high-risk activities such as smoking and can also promote the moderate use of alcohol and establish a zero tolerance drug and alcohol abuse policy. Other workplace initiatives include offering healthy choices in vending machines and alternatives to pizza and beer at employee events.