Health policy researchers have conducted new analysis and simulations have determined that only a select few employers will take advantage of certain rules that allow some small businesses to avoid pending health care reform measures. This will render the rules obsolete and will also minimize their impact on health insurance costs.
However, that could very well change should the rules be rewritten to extend the opt-out offer to a wider range of companies, according to the study by nonprofit policy research group RAND Corporation. Experts believe that if you allow more employers to keep their old plans then the government would drive the premiums up that are offered to small employers through health insurance exchanges. In addition, they could also cut enrollment in those programs.
According to lead author of the study and Senior Economist for RAND Christine Eibner, “We found that keeping the rules as they are written, particularly the limitations on maintaining a grandfathered plan, will be essential to keeping premiums affordable in small business insurance exchanges.”
Starting in 2014, under the Affordable Care Act, laws that govern health insurance plans for owners of small businesses will no longer allow insurers to set premiums based on the gender, health status or claims history of the enrollee. The goal is to disperse the financial risk of insuring unusually sick or high-cost individuals.
However, a lot of people fear that the plan will be undermined by small business owners with healthy workers who self-insure their firms or maintain grandfathered policies. These options are offered under the Affordable Care Act, which would allow them to bypass the new regulations.
If this starts to happen, then the government-sponsored exchanges would become disproportionately comprised of relatively unhealthy, expensive enrollees. This could very well make the premiums of small business owners extremely unaffordable.
RAND’s analysis, however, shows that small business owners will avoid self-insuring due to significant financial risk involved. Researchers also said that most small business owners won’t meet the required standards to be grandfathered in to existing health plans after 2014.
RAND also said that neither of these alternatives will have any real impact on exchange premiums, should the language in the Affordable Care Act stay the same. However, if regulations were more relaxed to allow more companies to keep their current plans, RAND believes that the cost of premiums offered to small business owners via health insurance exchanges would climb exponentially, possibly cutting enrollment in the plans by 50%.
Source: The Washington Post – Small business owners not expected to opt out of health care reform