More small businesses will have to adopt Obamacare’s insurance changes next year, which business groups say could result in higher premiums.
Obamacare required small-group healthcare markets to cover essential benefits similar to those in the individual market. Those include capping enrollees’ out-of-pocket costs and not excluding people due to pre-existing conditions.
Insurers also have to set rates using a single risk pool that includes all enrollees across their small group plans in the state.
Currently these provisions affect businesses that have 50 or fewer workers. But next year the provisions will kick in for businesses that have 51-100 workers. The change in the definition of a small group would differ from the employer mandate, which calls on companies with 50 or more employees to provide health insurance for their workers.
About 64 percent of members in groups with 51-100 employees would get a premium increase in 2016 as a result of the expansion, with these groups seeing an 18 percent increase on average, according to an analysis supported by the BlueCross BlueShield Foundation, a charity arm of insurance giant Anthem.
“The premium impact will worsen over time as mid-sized firms leave the market rather than pay higher rates,” said Alyssa Fox, senior vice president of the foundation, at the briefing. Members of Congress are pushing to stop the expansion.
In the midst of the potential spikes, a bill in the Senate filed in April by Sens. Tim Scott, R-S.C., and Jeanne Shaheen, D-N.H., would leave it up to states to extend the definition of a small employer to 51-100 workers.
A companion bill in the House would do the same thing.
But any delay of the expansion could hinder small businesses already struggling to adopt the healthcare law, according to Terry Gardiner, president of the Small Business Majority, which represents small business owners.
Obamacare created the Small Business Health Options Program (SHOP), which is an online marketplace that allows small businesses to buy coverage from multiple carriers and plans. Each state runs its own SHOP or relies on the federal government’s online marketplace, similar to the set-up for regular Obamacare enrollees.
SHOP has gained little traction so far, having an estimated 180,000 in 2015, up from 72,000 the year before, according to the website acasignups.net.
The 2016 expansion will help SHOP by increasing the size of the insurance pool and help spread risk among a larger group of people, Gardiner said.
“We don’t have full participation of all insurers with the SHOP exchanges so we need to encourage more companies,” Gardiner added, speaking at an Alliance for Healthcare Reform Capitol Hill briefing last week.
Some business and insurer advocates shot back that the expansion could destabilize the fragile SHOP marketplaces and raise premiums.
The U.S. Chamber of Commerce called on the expansion to be delayed or completely halted.
But if the expansion is halted, then small businesses would lose a “wealth of benefits” that come with Obamacare’s insurance reforms, the Small Business Majority said.
“These employers will no longer be charged more for insurance based on the gender or health status of their workers, and new limits will be in place to control how much more a business can be charged for its older workers,” wrote John Arensmeyer, the group’s founder and CEO in a March blog post.
