Small businesses face hiring challenges after the Great Resignation of 2021 — and healthcare costs can make it harder | hioscar Blog | Oscar
Small businesses face hiring challenges after the Great Resignation of 2021 — and healthcare costs can make it harder
Small businesses weighed in on the struggle to hire and stay competitive on healthcare benefits in a recent study.
Employee Health BenefitsTips for Small Businesses
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For small businesses, being open after pandemic lockdowns was cause for celebration. Until the workers didn't show up.
Last April, about 4 million people in the US quit their jobs (2), the most since the Bureau of Labor Statistics started publishing the data in 2000. In the "Great Resignation," small businesses face an uphill battle for labor. Some employees are leaving for better pay and benefits, while some are leaving the workforce and relying on government programs.
In a recent survey from the National Federation of Independent Business, 50% of independent businesses said they had job openings they struggled to fill, and 41% reported raising compensation in part to stay competitive as employers.
Small businesses are a key part of the economy. economic rebound — the US Small Business Administration said in 2019 that they accounted for two-thirds of net new jobs (3). Today, small businesses — defined as 500 employees or less by the SBA — make up 99.9% of all firms (4). But they struggle to raise their prices enough to compensate for the rising costs of benefits and wages.
Amid this job climate, the Cigna + Oscar alliance, along with Insider Studios and first-party data and insights platform provider Dynata, conducted a survey(1) of small-business owners and health insurance/employee benefits decision-makers and employees to see how both groups felt about healthcare and how it impacted recruitment or job decisions. The survey, fielded in July 2021, reached 406 small-business owners and decision-makers and 385 employees across the US.
Insurance is tailored to large enterprises, leaving small businesses behind
Seventy percent of small-business owners and decision-makers surveyed said health insurance wasn't built with small businesses in mind (1). For many small-business owners, the problem is that providing health insurance is expensive and is suited more for large enterprises.
"In an increasingly complex and frustrating healthcare system, small- to medium-sized businesses are feeling unsupported and perhaps even left behind," said Jeff Berardo, a Cigna sales director. "Many leaders feel that insurance plans favor mid-to-large businesses."
That makes small-business owners and decision-makers feel like they're at a disadvantage when trying to hire talent.
Owners and decision-makers surveyed struggle to compete for employees. Results from the survey(1) included:
37% said they felt they couldn't expand their workforce because of the cost of health coverage for workers.
47% said they felt their company would lose out on the best workers if they couldn't offer competitive benefits.
60% said they limited healthcare benefit options because of high costs.
59% said they felt they couldn't compete with the benefit offerings at larger companies.
72% said they would change providers if they could offer better benefits at a lower cost.
72% of small business owners and healthcare decision-makers would change providers if they could offer better benefits at lower cost.
"Small businesses have had to make extremely difficult decisions since the beginning of the pandemic and continue to face an uphill battle with the ongoing threat of the COVID-19 variants," said Louis DeStefano, head of the small group business and senior vice president of growth at Oscar. "Cigna + Oscar offers affordable solutions to meet the unique challenges that many small-business owners face as they work to keep their employees healthy."
Adding to the challenges for small businesses offering health benefits, employees also say they want improved benefits. Seventy-six percent of surveyed workers said if a different health insurance company offered better benefits at a lower cost, they'd want their employer to switch.(1)
Small businesses struggle to provide competitive healthcare benefits
Small-business decision-makers and employees have similar attitudes toward the healthcare system. For instance, most respondents said they felt the US's healthcare system is broken and needs fixing (73% of small-business owners and decision-makers and 68% of employees (1)). A majority in both groups (85% of small-business owners and decision-makers and 88% of employees (1)) also said they believe everyone deserves access to affordable healthcare.
When it comes to perceptions about employer offerings, there's a gap between owners and employees. For example, 71% of small-business owners and decision-makers said they prioritized their employees' health, while 60% of employees said owners prioritized employees' health.(1)
Though employee-retention challenges aren't exclusively tied to benefits, benefits often make up a significant portion of an employee's compensation package. And it's one area in which small businesses said they can't compete with larger employers. A little over one-third of employees surveyed said they had considered leaving for better health insurance or benefits alone.(1)
Companies that can offer better packages have a better chance of competing for talent. The Cigna + Oscar alliance suggests companies survey employees to see what they value most, then work with an insurance provider to meet those needs.
"The right provider can offer guidance and a competitive package," Berardo said. "That, in turn, can ensure employees are taken care of, and support hiring efforts and retention."
Cigna + Oscar coverage is insured by Cigna Health and Life Insurance Company. CA: benefits administered by Oscar Health Administrators. Other states: benefits administered by Oscar Management Corporation. Pharmacy benefits provided by Express Scripts, Inc. Cigna + Oscar health insurance contains exclusions and limitations. For complete details on product availability and coverage, please refer to your plan documents or contact a representative.
