Will Premiums Rise for Small Businesses?

Today we return to our series exploring lingering questions small-business owners have about the Affordable Care Act. Today’s question is a basic one: Will premiums for small businesses rise in 2015, and if so, how steeply?

If you asked someone in the health insurance industry earlier this year — the executives at the insurance carriers or the brokers and agents who sell their policies — the word on premiums was grim. In March, an unidentified insurance industry executive told The Hill that “everybody knows” that the way the exchange has rolled out “is going to lead to higher costs.”

Then in April, a survey of insurance brokers by Morgan Stanley found that insurance premiums for small businesses were rising, on average, 11 percent, and at least 20 percent in 15 states. In Washington state, according to the report, small group rates were rising at the astounding rate of 588 percent. The report quickly became fodder for conservative media and Republican attack ads around the country.

Now it is October, and many states are finalizing rates in the small-group market for next year. And we are learning, anecdotally, that the rate increases facing most employees insured through a small business will be considerably lower than the dire predictions. By and large, it appears that the increases will be less than 10 percent. In some cases, they will be near zero — and at least one state is claiming the average rate increase will actually be a rate reduction.

The evidence is anecdotal because, as far as we can tell, nobody is systematically collecting, let alone analyzing, small-group insurance rates for next year, though in many states they are disclosed in regulatory filings that are freely available online. Several organizations are tracking rates for the individual market, most notably the accounting firm PricewaterhouseCoopers, which has a couple of staffers working nearly full time on the endeavor and has compiled average rate information in a clickable map.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary