One of the first things potential employees ask Eric Michelson about is health insurance. Can they get it, how much will it cost and how good are the benefits.
Michelson, owner of Michelson’s Shoes in Lexington, offers it, but it hasn’t been easy with annual double-digit rate hikes. He is among those hoping that business groups such as the Retailers Association of Massachusetts are going to come up with cheaper options.
“It’s a tremendous expense to treat our employees the way we want to treat them,” he said. “Our goal is to provide a competitive workplace.”
For years business groups have spent time and energy fighting for the right to band together to buy health insurance in hopes that they could get better rates. Now that they have the go-ahead from the state to form buying cooperatives, the pressure is on to deliver savings.
“We’re hoping that by bringing together a large group of people, a diverse group, that we’ll be able to get insurance at a rate that’s equivalent to what our large competitors are paying,” Michelson said.
So far, two organizations, the Retailers Association of Massachusetts and the Massachusetts Association of Chambers of Commerce, have been approved to form buying cooperatives. Under the new state law, there could be four more.
The two that have approval said they would like to have something in place by April 1, which is the most common renewal date, but that will be a push.
There are a lot of conversations and negotiations with insurers and providers about the options. Initially, the retailer and chamber groups are just looking to get some basic plans on the table for members, but ultimately they want to offer some creative alternatives.
“You want to offer a variety of plans that can help all of your constituencies,” said Jon Hurst, president of the retailers group.
Some companies might want plans with low a deductible of under $500 while others would prefer cheaper plans with a large deductible of up to $2,000.
“The point is, we want more competition and choices for small businesses and their families,” Hurst said.
It’s not clear yet how much savings the cooperatives will be able to offer. The organizations won’t be able to offer self-insured plans such as those that large companies provide. But supporters say just being able to buy in bulk should help.
“I think we will see some meaningful relief,” said Michael Widmer, head of the Massachusetts Taxpayers Association. “I’m hopeful that we’ll see some innovation as well. Employers are increasingly beginning to say ‘we need to be a part of the solution,’ and their employees as well.”
The retailers group, which offers other bulk buying programs, including one for workers compensation insurance, is using its infrastructure to set up the plans.
The Massachusetts Association of Chambers of Commerce has hired a consultant to help with negotiations, according to Tom O’Rourke, who is president of the all-volunteer organization and also of the Neponset Valley Chamber of Commerce.
“We don’t know yet what the savings will be,” he said, “but we know that any savings are better than one we have now.