New Affordable Care Act regulations could raise premiums for as many as 11 million small business employees but lower them for six million others, according to a report from the CMS Office of the Actuary, AP/Modern Healthcare reports (AP/Modern Healthcare, 2/24).
Under the ACA, health insurers must limit premium costs for older adults to no more than three times the cost of premiums for younger people (California Health Line, 3/18/13). As a result, small companies with generally younger employees will see premiums rise, while small businesses with generally older workers will see premiums decrease (AP/Modern Healthcare, 2/24).
Overall, the ACA will increase premiums for about 65% of small businesses, while about 35% of small companies will see declines in premiums.
'Large Degree of Uncertainty'
According to the report, there is "a rather large degree of uncertainty" about the estimated effect on premiums. The report stated, "The impact could vary significantly depending on the mix of firms that decide to offer health insurance coverage." The report also noted that businesses' decisions on whether to provide coverage for their workers will be based on a variety of issues beyond factors examined in the analysis.
In addition, the report found that two other provisions of the ACA -- guaranteed issue for people regardless of pre-existing conditions and guaranteed coverage renewal -- will not affect premiums.
ACA's Impact on Businesses' Bottom Lines Already Evident
In related news, the ACA's effect on businesses already is evident, as more than 80 public companies have said the ACA either is currently affecting or is expected to affect their earnings, according to a Wall Street Journal analysis of earnings-call transcripts.
According to the Journal, the bottom-line effects the ACA will have on businesses are evolving as changes are made to the law, such as the Obama administration's recent decision to again delay the employer mandate.
Still, trends of the ACA's effect on businesses, particularly earnings, are emerging, such as:
- Media and advertising companies and staffing and outsourcing firms are seeing revenue gains;
- Insurers, which are heavily investing in both technology and staff, are experiencing financial losses ahead of what they anticipate to be gains; and
- Large employers are spending more on health coverage for full-time employees or to train new, part-time workers who will not necessarily qualify for employer-sponsored coverage under the law (Knox, Wall Street Journal, 2/24).