Report Sees Rising Premiums for Many Small Businesses Under Obamacare

Actuaries from the Centers for
Medicare and Medicaid Services (CMS) estimate that about two thirds
of small businesses will see their health insurance premiums rise
under Obamacare.

Via The Wall Street Journal.

The report analyzed employers with 50 or fewer full-time
employees that buy outside insurance policies for workers, a group
it estimated at 17 million people in 2012. It focused on a piece of
the 2010 law that prevents insurance companies from pricing
policies based on customers’ health status.

Before this year, insurance companies could charge higher prices
if an employer had older, sicker workers. Now, under the Affordable
Care Act, insurance companies can’t price on health status and are
limited by the amount they can price by age.

The report concluded that about 65% of small businesses, or
plans covering 11 million people, would see an increase in
insurance premiums under these so-called community-rating
provisions of the health law. About 35% of employers would see a
decrease for plans covering six million people. 

The report looks narrowly at restrictions built into the law
which limit higher premiums for sicker or older workers. It doesn’t
factor small business tax credits or other parts of the law that
might affect premiums into the equation. And it doesn’t indicate
how large the increases or decreases might be. But it does
highlight the way that Obamacare’s rating rules change the cost
calculous for insurers and for employers, and the ripple effects on
coverage and costs that are likely to continue for a while into the
future.