Thursday, February 27, 2014

Obama Administration Estimates ACA to Accelerate Small Business Health Insurance Premiums: When Promised Premium Decreases Become Premium Increases

“Nearly two-thirds of small businesses that currently offer health insurance to their workers will pay more for coverage as a result of new rules in the health care law, as will millions of small-business employees and their family members, according to new estimates released by the Obama administration.

The Centers for Medicare and Medicaid Services, which has spearheaded the implementation of the law, has acknowledged that new rules requiring insurers to offer guaranteed coverage and renewal options to small employers will likely drive up the price of insurance for some companies. So will rules banning insurance companies from varying their rates based on factors like a company’s industry or the age of its employees.

On the other hand, some firms with exceptionally sick or at-risk workers will benefit from those provisions and see their premiums come down under the new rules, which took effect this year.

What we didn’t know was how many small businesses would see their rates rise and how many would see them fall. Now, it’s becoming clear.

“We are estimating that 65 percent of the small firms are expected to experience increases in their premium rates while the remaining 35 percent are anticipated to have rate reductions,” CMS’ Office of the Actuary wrote in a new report. Conversely, “the effect on large employers is expected to be negligible,” because most large companies run their health insurance programs in house.”

“If accurate, it would continue a steady climb in insurance costs for many small businesses. Ninety-six percent of small businesses say their premiums have increased in the past five years, with the average monthly insurance cost soaring from $590 per employee in 2009 to $1,121 in 2014, according to poll released earlier this month by the National Small Business Association.” - Obama administration: Health law’s new rules will increase costs for most small businesses,, 02/24/2014


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