Small Firms’ Actions In Two Areas, And Exchange Premium And Enrollment Impact

Abstract

The Affordable Care Act changed the regulations governing small firms' health insurance premiums. However, small businesses can avoid many of the new regulations by self-insuring or maintaining grandfathered plans. If small firms with healthy and lower-cost enrollees avoid the regulations, premiums for coverage sold through insurance exchanges could be unaffordable. In this analysis we used the RAND Comprehensive Assessment of Reform Efforts microsimulation model to predict the effects of self-insurance and grandfathering exemptions on coverage and premiums available through the exchanges. We estimate that Affordable Care Act regulations restricting employers' ability to offer grandfathered plans will result in lower premiums on plans available through the exchanges and will have small negative effects on enrollment in the exchanges. Our results suggest that these regulations are essential to keeping premiums on the Small Business Health Options Program (SHOP) exchanges affordable. Our analysis also found that Affordable Care Act regulations limiting self-insurance will reduce enrollment in the exchanges somewhat, without substantially affecting exchange premiums.

Will Employers Drop Health Insurance Coverage Because Of The Affordable Care Act?

“…In addition to CBO, organizations that have conducted microsimulation analyses include the Urban Institute (32, 33), the RAND Corporation (34), the Lewin Group (35), and the Office of the Actuary (OACT) of the Center for Medicare and Medicaid Services (36). The bottom-line predictions from these analyses about how health reform will affect employer offering are summarized in Exhibit 4.…”

Regulating Stop-Loss Coverage May Be Needed To Deter Self- Insuring Small Employers From Undermining Market Reforms

“…3,4 According to one econometric analysis, small employers' ability to self-insure would not threaten regulated markets because most selfinsuring small employers would drop coverage instead of purchasing coverage if self-funded benefits were not feasible. 5 Other analysts, however, consider that self-insuring presents "a clear and present danger to the viability of the smallemployer market." 6 Econometric analyses based on current and past market conditions are limited in their ability to anticipate major changes in market conditions.…”

Employers And The Exchanges Under The Small Business Health Options Program: Examining The Potential And The Pitfalls

“…A group of authors from the RAND Corporation examines the implications of the Affordable Care Act for self-insured plans. 22 Self-insured plans become more attractive under the Affordable Care Act for two reasons. 23,24 First, they are subject to fewer regulatory requirements than are insured plans.…”

“…In their article, the RAND team of Christine Eibner, Carter Price, Raffaele Vardavas, and Federico Girosi examine how the Affordable Care Act might affect grandfathered and self-insured plans. 22 The authors use the powerful RAND Comprehensive Assessment of Reform Efforts microsimulation model to examine the effect of the Affordable Care Act's grandfathered and selfinsured plan provisions on insurance coverage and exchange premiums. They conclude that the plans of most small employers will lose grandfathered status by 2014 but that most of these employers will offer coverage through exchanges.…”