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.