The small group market for health insurance is so bad that larger small businesses don’t want to go there.
The U.S. Chamber of Commerce and 17 trade associations have asked the Department of Health and Human Services to delay moving businesses with 51 to 99 employees from the large group market to the small group market in 2016. That’s the year the Affordable Care Act called for this change to be made, and the year businesses of these size were supposed to be eligible to purchase insurance through the Small Business Health Options Program (SHOP) insurance exchanges.
In their letter to HHS, these business groups asked the agency to “immediately delay” the redefinition of the small group market to 2018. Otherwise, businesses with 51 to 99 employees will face fewer choices for insurance and premium hikes of 20 percent or more, the letter contends. Plus, it’s appropriate to delay this change since other related provisions of the ACA, including the employer mandate and full implementation of SHOPs, have been delayed, these business groups argue.
The ACA was structured to allow businesses with 51 to 99 employees to have two full years of coverage under “shared responsibility” — e.g. employer mandate — rules “before moving their plans into the small group market and subjecting these plans to the additional benefit and premium rating requirements of the small group market,” the letter states. “These two years have not been afforded, due to transition periods and delays that were unforeseen, but necessary.”
“Continuing with a redefinition of small group now would be particularly harmful and disruptive,” the letter contends.
Businesses with fewer than 50 employees, however, would benefit from having larger businesses in the small group market, said John Arensmeyer, founder and CEO of Small Business Majority, an advocacy and research organization.
“The entire pool becomes bigger,” he said.
That should make insurance premiums lower than they would be without these additional businesses, he said.
Plus, making businesses with 51 to 99 employees eligible for SHOPs would be good for these small business insurance exchanges, which have gotten off to a “disappointing” start, Arensmeyer said. Larger small businesses have more time and human resources to look for coverage on the SHOP exchanges, he said.
“We’ll also see more broker involvement in SHOP as firms of this size are more liekly to utilize the hlep of agents,” he said.
Plus, “there is no legal basis to delay expansion of the small group market,” his letter to HHS argues.
HHS, however, has changed the ACA’s requirements on its before, and it may do so again.
The change could come any day now — the U.S. Chamber of Commerce’s letter contends HHS needs to act as soon as possible.
“If a delay is granted too late, insurance companies and carriers will have already filed rates and plans with the expanded small group definition and businesses and workers will still face the negative impacts,” this letter states.