Rising Premiums May Hit Small Firms

Report Predicts 65% Will Pay More for Health Insurance. A federal actuarial report predicts that 65% of small businesses will see their health-insurance premiums increase under part of the Affordable Care Act.

  • The report, from the Centers for Medicare and Medicaid Services Office of the Actuary, is the latest piece of bad news for the president’s signature domestic achievement. The report analyzed employers with 50 or fewer full-time employees that buy outside insurance policies for workers, a group it estimated at 17 million people in 2012.
  • The report concluded that about 65% of small businesses, or plans covering 11 million people, would see an increase in insurance premiums under these so-called community-rating provisions of the health law. About 35% of employers would see a decrease for plans covering six million people. These employers aren’t required to pay a penalty under the federal health law if they don’t insure workers.
  • The report didn’t estimate by how much premiums would increase or decrease for the groups. It also didn’t take into account other parts of the health law that impact the cost of plans, such as tax credits that small businesses are eligible for if they offer insurance.
  • In 2009, before the Affordable Care Act passed, the Congressional Budget Office estimated that most small businesses wouldn’t see a big impact on premiums from the proposed health law. It projected a rise of 1% to a reduction of 2% in premiums for small employers in 2016 when the law was fully implemented.
  • Indeed, the impact on premiums for small employers under the health law for 2014 hasn’t been fully seen. Many employers renewed existing plans early, and about half of states allowed insurance policy extensions under pre-health law rules, according to the CMS report. The report also noted “there is a rather large degree of uncertainty associated with this estimate.”
  • Additionally, the report said small businesses with healthier-than-average employees were more likely to offer health insurance before 2014 and were paying below-average premiums.
  • In November, the Obama administration delayed the online enrollment for small businesses though healthcare.gov for a year. Small businesses that want to participate in the federal small business exchange need to enroll directly through an insurance company or use an agent or broker. This exchange is available for small businesses with 100 or fewer employees.

*Modified from a WSJ.com article

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