Coverage Costs Rise

Obamacare costs


The White House has long pitched Obamacare as a boon to small business owners. A fact sheet on the law's effects touts that increased choice and financial benefits under the law "will provide enormous benefits to the millions of small business owners and the tens of millions of small business employees by expanding coverage options, increasing purchasing power, [and] lowering costs."

But according to a February report from actuaries at the Centers for Medicare and Medicaid Services (CMS), which administers the federal components of the health law, the law's insurance market reforms will actually raise the price of health premiums for the majority of small businesses.

CMS actuaries estimated that 65 percent of small businesses with fewer than 50 employees would see higher premiums as a result of Obamacare. Those higher prices will affect about 11 million of the 17 million people who work for small employers. The other 35 percent of small businesses would see premiums reduced.

The higher premiums are a result of insurance market regulations built into the law which limit how much insurers can charge firms based on age, health, and other factors. Firms with younger, healthier employees will mostly see their premiums rise.

Most small employers aren't likely to see more health plan choices either. In April 2013 the Obama administration postponed the choice component of the health law's small businesses exchanges. Then in November the administration delayed the small business component of the federal exchange system, which covers 36 states, entirely.