Why HRAs (Health Reimbursement Arrangements) are not more popular among small businesses?

I was looking for health insurance plan for my new start-up. When I started comparing group plans vs. individual plans, I found out that individual health insurance plans are a lot cheaper then group plans probably because all the employees in my company are in good health. Since most states don't allow insurance carriers to deny group coverage to small businesses, they tend to be a lot more expensive. The other reason is that group plans tends to be richer.

After comparing price and features, I wanted to go with individual health insurance for my company but I ran into following challenge:

Premiums (both employer and employee contributions) for group plans can be paid for from pre-tax dollars where as there is not a simple mechanism to pay for individual health insurance using pre-tax dollars. I found out that HRA (Health Reimbursement Accounts or Health Reimbursement Arrangements) can be a great way to facilitate this but setting up and adminsitering such a plan can be complex.

There are many companies that can help one setup and administer such a plan but I could not found any one with integrated solution that also includes letting employees seamlessly use the HRA funds to buy and automatically pay insurance premiums. Because of this experience, I am considering making it a high priorty for my company, hCentive, to offer a seamless HRA solution. I would like to hear from you, your wish-list for such a solution.

Did you know you are buying three products when you buy health insurance n USA?

Many people don't realize but they are really buying 3 products when they buy health insurance:

• Discount Card - Whether we realize it or not, the list prices offered by most service providers are 2 to 10 times the negotiated price an insurance company pays to the service provider for the service. The challenge is if a procedure is not covered by your insurance company (or if you are uninsured), you end up paying list price. I can understand 10% to 20% price differential based on volume and other benefits of working with an insurance company but a 10x price difference in my opinion is completely broken.
• Pre-Pay - You might be delighted to know that your insurance plan pays 100% for your annual exam but the reality is either you or your employer is pre-paying for it as part of the premium irrespective of whether you use it or not. Does it make sense to pre-pay for a service particularly if there is no refund if you don't use the service?
• Insurance - Insurance part of the plan covers for un-expected illness and injury.

Obvisouly, combining the three products into one product makes it a very complex product. My company is trying to simplify this for potentially buyers (consumers and small businesses) and help them quickly select the right health insurance plan.