Although small employers have made fewer than expected changes to their employee health coverage in the wake of the Affordable Care Act (ACA), a new report suggests that 2017 will be the year for big shifts in the small-group health insurance market.
Prepared by researchers at Georgetown University’s Center on Health Insurance Reforms with funding from the Urban Institute and Robert Wood Johnson Foundation, the report looks at recent trends in small-business health insurance, including the effects of new incentives created by the ACA.
Researchers conducted interviews with small business insurers, brokers and state officials in five states which were selected because their share of small employers who offer coverage to workers appears to be declining faster than the national average (Arkansas, Montana, New Mexico, Pennsylvania, and Vermont). Nationally, the percentage of small employers offering insurance is down nearly 10 percent since 2010.
Researchers found relatively few employers have taken advantage of the Small Business Health Options Program (SHOP), the ACA-established program allowing them to compare and purchase health coverage for their workers more easily. Some employers, but less than expected, have dropped coverage altogether because their workers can now qualify for federal subsidies that defray the cost of coverage purchased through insurance marketplaces. For larger small businesses, many insurers and brokers are poised to sell new, self-funded products that allow them to escape many of the ACA’s consumer protections.
The researchers say many other small employers have maintained their pre-ACA policies. Some of these plans are ‘grandfathered’ and can continue if they are not significantly modified, while others will be phased out within the next two years. Researchers say this may explain why many small businesses nationwide have not yet considered the new options available to them since the ACA was implemented, but soon will.
“For the fully insured small group market, it has basically been a case of ‘death by a thousand cuts’, as a number of alternatives to ACA-compliant plans have been available to employers,” said Kathy Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation. “The challenge is that there is currently no real way to stop the bleeding, and this makes it difficult to maintain enrollment in ACA compliant policies without doing more for employers.”
About the Robert Wood Johnson Foundation
For more than 40 years the Robert Wood Johnson Foundation has worked to improve health and health care. We are striving to build a national Culture of Health that will enable all to live longer, healthier lives now and for generations to come. For more information, visit www.rwjf.org. Follow the Foundation on Twitter at www.rwjf.org/twitter or on Facebook at www.rwjf.org/facebook.
