The biggest health insurers in the market are seeking rate increases for small business customers that range from 3 percent to 16 percent, according to filings released this month by the federal government.
The growth rates might sound high compared to wages or general inflation, but they're a far cry from the individual market, where
The contrast shows the relative stability of what's called the "small group" market vs. an individual market that's still undergoing big changes with the federal health law.
"The rules of how somebody buys their insurance, who can buy their insurance and what it might cover were completely rewritten" in the individual market, said
Small group health plans provide coverage for businesses with two to 50 full-time employees. Last year, about 262,000 people in
The individual market provides coverage for self-employed people and those who don't get health insurance from an employer. Currently, about 270,000 state residents buy policies in the market, which has been the focus of changes with the federal Affordable Care Act.
While the individual market last year saw an average increase of 41 percent, the small business market increase was just 1 percent.
Even at that low rate, costs were high enough that some small business owners questioned if they could afford to continue offering health plans, said
The proposed rates for 2017 aren't final, and could still be marked down through regulatory review. Final numbers are expected
In general, the number of small businesses offering coverage has been declining for several years. The lack of benefits can make it hard for firms to recruit and retain talented workers, Graves said, so the trend threatens a key sector in the state's economy.
"A lot of the economic energy and vitality comes from small business growth and expansion, and starting businesses," he said.
In its filing with regulators,
Stein said he's telling clients they should expect increases in the neighborhood of 6 to 8 percent, which is simply a reflection of what's happening to the underlying cost of health care. Many groups will find that by increasing deductibles, they can keep premiums pretty level, he said.
Medical cost trends have been picking up due to the growing cost of specialty pharmaceuticals, said
"The small group market is a mature risk pool that health plans understand," Naylor said. "And so, on average, the premium will likely increase with [medical cost] trend, which is somewhere in the mid-single digits."
In the individual market "there was a transformational change in what makes up that risk pool, and how health plans price it," Naylor said.
In 2014, the health law made it illegal for health insurers to deny coverage to people based on preexisting conditions. The change prompted the state to start shutting down a high-risk pool for people who previously couldn't get coverage from insurers, since they could buy in the individual market.
The impact of the shift shows in per-capita claims.
Whereas the average person in the individual market during 2013 had claims of
When individual market premiums were relatively low compared with small group rates in 2014, some people moved out of small business plans to capture the savings. Now, insurers are seeing a shift in the other direction.
"We have seen movement from individual plans back to small employer coverage," said
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