Small Businesses Likely to Pay More for Health Insurance Under ACA

Many small business owners have likely been wary about the ways in which the Patient Protection and Affordable Care Act would end up affecting their bottom lines for some time now, and it appears that those concerns were well-founded after all.

A recent study from the Centers for Medicare and Medicaid Services, which is overseeing the health insurance exchanges mandated by the ACA, suggested that 65 percent of small businesses currently paying for at least some of their employees’ health insurance would end up facing higher costs as a result, according to a report from CNNMoney. The other 35 percent, though, could see their costs reduced in some way. In all, about 11 million people would likely face higher prices for coverage, while 6 million would see their decline. There is no clear data yet as to how much these premium prices would rise or fall.

However, some experts say that such changes might, in the end, be of a benefit to employees at these companies anyway, the report said. This is because health insurers used to set premiums based on a number of factors, such as overall health of the company’s workforce, or even the percentage of men to women that worked there. As such, progress in terms of getting workers healthier could have resulted in lower costs, but there was a flip side to that coin.

“But if an employee became seriously ill, then that could also push up rates for everyone,” Gary Claxton, vice president of the Kaiser Family Foundation, told the site.

What’s changing?
Beginning on Jan. 1, 2014, health insurance issuers will no longer be able to charge companies more for coverage regardless of their health status or other factors, the report said. As such, it seems likely that they will increase prices across the boards as a means of mitigating what they see as being a potentially greater risk than they might have faced before. However, it’s important to note that companies whose plans haven’t changed in any way and are therefore grandfathered into the law’s protections will probably see no increase or decrease to their costs until their plans change in some way.

Companies worried about paying more for health coverage might want to look into the ways in which cutting costs for other types of small business insurance can help them. Finding more affordable liability insurance, for instance, can go a long way toward trimming some fat from any enterprise’s bottom line.