|By Christopher Snowbeck, Pioneer Press, St. Paul, Minn.|
|McClatchy-Tribune Information Services|
But the more pressing issue for Schmidt's office products business is a possible rate increase of up to 40 percent if he renews in 2014 his current group insurance coverage.
By speeding up the renewal timeline to
It's a move he's likely to take, even though it means Schmidt wouldn't be able to shop on MNsure, the name for the state's health exchange.
"I would renew December first if it will delay that hit for a year," said Schmidt, the owner
of Great River Office Products. Besides, he said, the extra time "would give MNsure a year to work out the bugs."
Health insurers say Schmidt is not alone in considering an early renewal to avoid costs that will come for some small groups in 2014 with the federal Affordable Care Act. The motivation is just another reason, some insurance experts say, that attracting small businesses could be challenging for MNsure.
MNsure officials, however, say small businesses will find plenty of reasons to come to the exchange. While some users of the MNsure website have had trouble creating accounts since it launched
"It's possible that some small employers may decide to renew their current policy before 1/1," wrote
CHASING SMALL BUSINESS
The law requires that almost all individuals have health insurance next year, or pay a tax penalty. It does not require that small businesses with 50 or fewer employees offer coverage to workers. Even so, the federal health law creates a new option for these companies with the Small Business Health Options Program, called SHOP, for short.
While the state and federal health exchanges are displaying coverage options for individuals seeking insurance, they also include "SHOP exchanges." Small businesses using the exchanges can obtain federal tax credits and move to a "defined contribution" approach to health insurance, where employees take a set amount of money and apply it to their choice of health plans.
With the approach, employers can "better predict their costs while providing employees with a range of choices that best fits their individual situation," said Reich, the MNsure spokesman.
In time, more small businesses might be interested in taking the defined contribution approach to health benefits, said
The more fundamental challenge for MNsure -- as well as the private market -- is that providing health insurance is just too costly for many small businesses. The law makes tax credits available to help some small businesses cover the cost, but the incentive is nowhere big enough, Parente said.
"They were always too small to begin with," he said of the tax credits. More broadly, Parente said: "Everyone always knew small group would be a challenge for the exchanges."
PLENTY OF COMPETITION
Seven insurance companies are competing for small business customers in the traditional health insurance market that continues to exist "outside" of MNsure, according to data from the state
So, small businesses will find more options outside the exchange.
Many small businesses use insurance agents and brokers when buying coverage, but MNsure has not yet made it easy for agents to work on behalf of a company on the health exchange.
"What we're hearing from (businesses) is that they are really planning on relying on their existing relationships with brokers to help guide their decisions," said
Some small business owners are interested in MNsure because they hope the new government-run marketplace will better control premium costs, said
"I think everyone is just for the most part relieved that they have some options, either today or in the future," said Britton, whose group that has been conducting outreach events on behalf of MNsure.
The premium spike confronting Great River Office Products stems from an issue that affects companies in different ways.
Starting next year, the insurance market for small groups in
Before community rating, healthier groups like Schmidt's company received premium discounts that reflected their lower-risk status while small groups with relatively unhealthy members in
"My people have taken care of themselves, and they're healthy," Schmidt said. "We have no smokers."
The net effect of the change for the overall market is that premiums on average won't change. Rate increases for groups like Great River Office Products will be balanced by rate decreases for other small groups.
"If employers paid higher premiums because their group was less healthy than average, they might be better off renewing in 2014," said
"So far, we haven't seen a significant increase in activity," Smith added, "but it's too early to tell."
(c)2013 the Pioneer Press (St. Paul, Minn.)
Visit the Pioneer Press (St. Paul, Minn.) at www.twincities.com
Distributed by MCT Information Services
We have detected that you are using an adblocker. The revenue we earn by advertisements allows us to publish quality content on InsuranceNewsNet.com.
If you wish to enjoy our content, please disable your adblocker and click the button below.
We hope you choose to whitelist our website and enjoy the content our team works hard to publish.