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Charlie Sykes: Sykes Writes

A Quarter of Small Business Here Could Drop Health Insurance In '14

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Grim, but inevitable.  We're starting to get a glimpse of what Obamacare is going to mean for employees around here. Of course, the president promised us that if we like our insurance we could keep it. If voters believed him, many of them are in for a rude shock. Bonus here: this suggests that the fiscal impact of Obamacare will be much worse than projected as far more businesses make the decision to off-load the costs onto the taxpayers.

Approximately one in four Milwaukee area employers with between 20 and 99 employees say they are either “likely” or “very likely” to drop their company’s health plan in 2014 and let employees purchase individual insurance through state run exchanges. That is a significant increase from the 16 percent of small employers who said they were likely to drop their health plan last year.

Those are the findings of the 2013 Greater Milwaukee Health Plan Renewal Survey conducted by HCTrends. More than 180 employers, representing an estimated 120,000 employees, participated in the online survey, which was conducted in cooperation with The Benefit Services Group (BSG®), the Business Health Care Group, the Metropolitan Milwaukee Association of Commerce (MMAC) and the Wellness Council of Wisconsin.

The Congressional Budget Office estimates that 4 million employees nationwide will lose their employer sponsored health insurance by 2016 because of the exchanges. Small employers are more likely to drop their coverage because they are exempt from penalties that will be assessed employers that don’t offer health plans and because smaller employers tend to have a more difficult time controlling health care costs.

Next year, for example, half of Milwaukee area employers with fewer than 100 employees expect their health plan costs will increase by at least 8 percent next year, even after they make plan design changes. At the same time, almost half of employers with 100 or more employees project their plan costs will increase less than 5 percent.

Affordable Care Act Increasing Plan Costs

While the increases for larger employers will be relatively small, they would have been even smaller without the Affordable Care Act. Eighty four percent of Milwaukee area employers with more than 500 employees say the Affordable Care Act will increase their health plan costs next year, with a third of respondents estimating the legislation will add at least 2 percent to their 2013 plan expenses.

Two components of the Affordable Care Act will increase plan costs in 2013. The first is a requirement that health plans provide birth control pills, diaphragms, tubal litigation and other contraceptive services at no cost to employees. The second is the “grandfather clause,” which exempts employer sponsored plans from some Affordable Care Act provisions if they don’t make significant changes to their health plans. This, however, is becoming increasingly difficult for employers. According to this year’s survey results, 75 percent of large employers have already lost their grandfather status or expect to lose it with the 2013 plan year, which is up from 60 percent last year.

Other survey results of note:

• Overall, Milwaukee area employers expect their health plan costs to increase an average of 8 to 10 percent next year, which is higher than the 5 to 7 percent renewal increase they predicted for this year

• Forty two percent of respondents said they were changing health plans or networks, which is about the same as last year, and 3 percent said they were terminating their health plans, which is down from 11 percent last year

• Eighty percent of employers are likely to make plan design changes. Two thirds of those making changes are looking to increase deductibles, copays and co insurance, while more than half are expecting to increase the employee share of the premium

• Seventy six percent of employers say their health plan enrollment will be the same on Jan 1, 2013 as it was on Jan. 1, 2012. Twenty percent of employers said their health plan enrollment will increase, which is down from 26 percent last year.

Results of the 2013 Health Plan Renewal Survey, broken down by employer size, are available at HCTrends.com.

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