Small business owners may be experiencing
sticker shock now that insurers are revealing the rates they want to
charge under the new health care law.
So far, in Rhode Island, insurers are requesting premium
increases of up to 14 percent for small business coverage when the
Affordable Care Act is fully effective Jan. 1. They're also in
double digits in Maryland.
Small businesses, especially those that are required, for the
first time, to start providing coverage under the Affordable Care
Act have been waiting for some clue about how much it will cost.
Many are worried that paying for health care will hurt profits and
have held back on hiring, spending or expanding. The information
that's been released to date is providing some insight, but not
enough for small businesses to be comfortable about making big
financial moves.
That's because the rates that insurers requested in filings last
month in three states - Maryland, Rhode Island and Vermont - are
far from final. They're subject to approval and changes by state
regulators. In Vermont, owners' decisions on coverage are likely to
be affected by a bill in the state Legislature that would provide
subsidies to coverage their employees might buy.
And in some states, insurers may decide to revise their rates
when health insurance exchanges - where companies and individuals
will shop for rates - are up and running later this year. The
insurers also haven't released details on what kinds of medical
coverage the premiums will buy.
"The last insurance company that we talked to told me it's
actually going to be more expensive than it was in the past," says
Peggy Farabaugh, CEO of Vermont Woods Studios, a furniture retailer
in Vernon, Vt. Vermont is the first state where premium requests
were filed.
Farabaugh says she has wanted to provide insurance for her
employees since the company was founded seven years ago. She hasn't
been able to afford it. She has nine employees, most of whom have
coverage of their own, but she's afraid that she still won't be able
to buy insurance for two of her workers under the ACA.
The filings do give employers a sense of what premiums will be
like, says Robin Lunge, Vermont's director of health care reform.
"They're really a ballpark number," Lunge says. "But don't get
wedded to the exact figures."
Many steps remain in the rate-setting process. Even people in the
insurance business don't have answers.
"We're telling clients we don't have all the pieces to make a
real determination. I have a sense, but it's tough to run our
business on a sense," says Allen Nassif, president of North
Benefits, a Vermont-based insurance brokerage that serves small
businesses in New England.
In Vermont, the rate requests are little changed from current
rates, according to Gary Claxton, a vice president at the Henry J.
Kaiser Family Foundation who has studied the proposals.
In Maryland and Rhode Island, they're higher because insurers are
being cautious, knowing that states are likely to revise their
proposed rates downward, Claxton says.
"Most people don't go into a negotiation with their best, final
answer," said Claxton, who expects some insurers to adjust their
rates if it looks like they won't be competitive.
Under the law, businesses with 50 or more employees will be
required to provide affordable coverage for their workers. But many
owners with fewer than 50 employees also want to provide insurance
as a benefit.
In Vermont, one source of uncertainty is a bill in the
Legislature that would provide for subsidies for individual rates.
That could affect employers with fewer than 50 workers who want to
provide coverage - it might be cheaper for staffers to buy
insurance on their own.
Originally published by JOYCE M. ROSENBERG AP Business Writer.
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