Big Declines In Small Group Market
By Cyril Tuohy
Business owners and financial advisors, take note: Proposed premiums in the small group market are estimated to be, on average, 18 percent lower under the Affordable Care Act than health premiums small employers currently pay.
The findings are included in the latest research about the new insurance marketplaces scheduled to take effect in 2014. Enrollment in the marketplaces begins Oct. 1 for plan years that start on Jan. 1.
Health premiums are also projected to decline dramatically in the individual market, according to the report. Consumers will have a choice of electing coverage at one of four levels: bronze, silver, gold or platinum.
But it is in the small group market where financial advisors, armed with good news from this latest research, may have the most impact on business owners who have shied away from offering health coverage because it is too expensive. While limited to six states, the results show that injecting more competition into the marketplace is having an effect on reducing costs, according to a research brief by Laura Skopec and Richard Kronick, of the federal Department of Health and Human Services.
In Colorado, the weighted average for the lowest cost of a silver level plan came to $391 a month for single coverage within a small group health plan, an 18 percent decline compared with what an employee would be paying now. The same comparison found premium costs declining by 36 percent in the District of Columbia, 35 percent in New Mexico, 21 percent in Oregon, 21 percent in Vermont and 8 percent in Washington, the report also found.
Small group premiums from the second-lowest cost issuer for 2014 are between 6 percent and 36 percent lower than the estimated pre-Affordable Care Act 2014 small group premium across the six states, Skopec and Kronick wrote.
While it is true that such large savings have to do with comparing average premiums in the pre-Obamacare environment to the lowest and second-lowest cost issuer premiums in 2014, all small employers have the option of choosing lower price offerings, the report said.
Skopec and Kronick also noted the “sentinel effect” state rate review boards had on lowering rates for insurers requesting rate hikes of more than 10 percent.
In the District of Columbia, UnitedHealthcare submitted a 10 percent rate reduction for small businesses after rates were posted publicly. Rates were also lowered between 1 percent and 8.2 percent for the small group market in Rhode Island.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].
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