CMS Estimates PPACA Could Raise Premiums for 11M Employees

The Patient Protection and Affordable Care Act could lead to higher health insurance premiums for 11 million employees at small businesses, although it might also reduce rates for about 6 million others, according to a CMS report.

checkThe report — issued to Congress last week — notes insurers could set lower premiums for small employers with younger and healthier employees before 2014. However, the PPACA prohibits insurance companies from using gender, health status and claims history as premium rating factors. It also stops insurers from charging older adults more than three times what younger adults pay in premiums. Because of these new rules, premiums for younger and healthier adults could increase, according to the report.

Previously, small companies (defined by CMS as those with 50 or fewer workers) that offered health insurance tended to be those whose employees had better-than-average health and therefore had lower premium rates. Roughly 65 percent of small employers offering health insurance have premium rates below average, according to the report. With the new PPACA premium rating requirements, that 65 percent is expected to experience increases in premium rates, while the remaining 35 percent will see rate reductions.

However, the report also notes there is "considerable uncertainty" of whether employers with fewer than 50 employees will decide to stop offering health insurance coverage and send their employees to the PPACA individual exchanges.

Under the PPACA's employer mandate, starting in 2015, businesses and companies with 100 or more employees are mandated to offer health insurance to those employees or pay a penalty of $2,000 per employee. The Obama administration recently delayed the mandate to 2016 for companies that have between 50 and 99 employees.

More Articles on Employer-Sponsored Health Insurance:
Survey: 54% of Employers Increasing Worker Responsibility to Handle Health Costs
Paul Levy: Comparing Health Plan Costs Pre- and Post-PPACA
Employer Health Insurance Premium Growth Hits Low Point, Analysis Finds 

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