This is a challenging question with many answers. One easy thing to do is to shift to a high deductible health plan (HDHP) from a standard “fee for service” or PPO plan.  In a HDHP, the employees pay the first $1,500 or $2,000 out of pocket before the insurance kicks in. Most of these policies are less expensive than standard fee for service plans, and usually include preventive coverage. The employee payments may be tax-deductible. The larger the group that can be part of the HD plan, the better the bargaining rate with insurance companies.

But what about employees that cannot afford the first $1,500 or $2,000 out of pocket?? This will always be a problem, so long as health insurance is coupled to employment. In those cases, the employee should be free to shop for a cheaper alternative. If one is not available, perhaps the employee can get into a public sector small group plan, if the particular state offers it. The only other alternatives are for the employer to lend the employee the funds, or deduct them gradually from the employees’ paycheck.

If a business is seriously in trouble, it might be worth it for the employer to use the European-Scandinavian model. In it, each employee is given a certain amount of money to buy his or her own policy in the private market. The employee decides whatever the best deal is for him or her, and attempts to purchase that policy. The employer then drops out of the picture. These plans can be employer subsidized at a lesser or greater rate. Some states also have health plans with more limited coverage set aside for small firm employees and employers at discounted rates. They are always worth checking out.