Three-in-four employees expected to utilize Sam's Club health exchange if offered
Sam's Club announced the introduction of a health exchange service in partnership with Aetna, to better serve its small business clientele. With that announcement, Sam’s Club becomes the first retailer to complement its full suite of healthcare offerings — optical, hearing, pharmacy — with a health exchange solution specifically targeting those who are arguably most concerned about health care: small business owners.
The move aligns Sam’s Club brands with all things health. “Whenever people visit Sam’s Club at all, I want them to be able to experience health-and-wellness in a way that they leave healthier no matter how they engage with us,” Sherri Thomas, director, managed care services for Sam's Club, told Drug Store News. “If it’s through our pharmacy, optical or hearing services, if they’re engaged in the exchange, if it’s through our health screenings, I want them to be a healthier person because they’re engaged with Sam’s Club.”
With the number of small business owners out there, Sam’s Club is about to get a whole lot busier. The company serves about 600,000 small business owners on a daily basis, making those small business owners a core part of Sam’s Club’s member base.
According to the U.S. Small Business Administration Office of Advocacy, there were 28.2 million small businesses (with less than 500 employees) in 2011 (the latest figures). A Kaiser Family Foundation study has confirmed a connection between the size of a firm and whether it offers health insurance. In that year, almost 50% of businesses with three to nine workers offered health insurance benefits to their employees. The ratio grows to 71% for firms with 10 to 24 employees, to 85% for firms with 25 to 49 employees and to 99% for firms with 200 employees or more.
In offering the health exchange, the sweet spot for Sam’s Club are those employers who employ between two and 49 people. “That’s typically what we have at Sam’s Club is those smaller business owners with on average four employees,” Jill Turner-Mitchael, SVP health and wellness at Sam’s Club, told Drug Store News. And to compete with employers larger than them, offering healthcare becomes a key point of differentiation.
“We know that [healthcare] is a place where small employers are very concerned – it’s one of the top issues they bring up to us as an area of concern for them in the running of their small business – which is why we think they’ll opt in.” When Sam’s Club surveyed its member base, 78% were interested in some form of health insurance offering, Turner-Mitchael said. “The fact that Sam’s was willing to go down this path, [they told us] that our membership card would be that much more valuable because of it,” she said.
As many as 31.4 million workers were employed by companies with less than 50 employees in 2011, according to the SBA Office of Advocacy.
That’s a lot of potential covered lives, especially in a still-recovering economy focused on growing jobs. Small firms accounted for 63% of the net new jobs created between 1993 and mid-2013 (or 14.3 million of the 22.9 million net new jobs), according to the Bureau of Labor Statistics. Since the end of the recession (from mid-2009 to mid-2013), small firms accounted for 60% of the net new jobs.
As many as three-in-four of those employees offered coverage through Sam’s Club’s exchange will take it. According to the Kaiser Family Foundation, the employee take-up rate (the proportion of workers who participate in a health insurance plan if it is offered) for workers in small and large firms is fairly similar — 78% of eligible workers in smaller firms (three to 199 workers) participate in their employer’s health insurance plan compared with 83% of eligible workers in larger firms (200+ workers).