ACA Coverage Options Prompt Some Small Businesses To Halt Plans
With more options on the individual market and subsidies to help individuals purchase coverage available through the Affordable Care Act, some small businesses are dropping company-sponsored health coverage, Kaiser Health News reports.
For example, health insurer Anthem -- the largest issuer of small business health coverage -- has lost about 300,000 small business plan members in the first nine months of the year, or about 15% of such enrollment. According to Anthem officials, many of those people are switching to exchange coverage, including plans offered by Anthem.
The subsidies available to many individuals purchasing coverage on exchanges could be the reason for the shift. By dropping company plans and sending individuals to the exchanges, employers can put the money originally intended for workers' premiums toward other costs. In addition, in some instances, employees are better off financially if the subsidies exceed the amount employers had contributed to health coverage.
According to Skip Woody, a partner at the benefits company Hill, Chesson & Woody, the businesses dropping company plans tend to be those with very few employees. "Anything above 15, we haven't had any dropping coverage," he said.
However, not all small businesses are dropping their company plans.
Rick Allegretti, vice president of marketing at Health Care Service Corporation, operator of Blue Cross plans in five states, said his company has seen small business plan sales grow slightly (Hancock, Kaiser Health News, 12/15).
Large Employers Could Turn to Private Exchanges
In related news, although companies such as Mercer, Aetna and Towers Watson have invested hundreds of millions of dollars to establish private exchanges, major employers are hesitant to sign on, Reuters reports.
The exchanges work by having employers contribute a fixed amount, which employees can use to purchase coverage. Employers are able to save money by not having to manage the benefits internally.
According to Reuters, after Sears Holding and Walgreen last year launched their own exchanges, many industry executives predicted more than 20% of U.S. workers eventually would use private exchanges to purchase coverage.
However, less than 2% of U.S. workers currently are using a private exchange. Further, no major U.S. company has signed up for a private exchange in 2015, according to Reuters.
Patty Fontneau, who operates Cigna's private exchange business, said the transition "is coming" but noted the shift is occurring more slowly than anticipated. Some companies are waiting for data about premium trends before making the shift. In addition, companies might also be reluctant to make the shift after recently updating plans to comply with the ACA.
Meanwhile, other experts have debated whether a majority of large employers will make the transition at all. Dan Mendelson, CEO of Avalere Health, said large employers have the benefit of significant leverage in negotiations with insurers and an exchange likely could not offer a comparable advantage (Humer, Reuters, 12/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.