Part 2: The Affordable Care Act: Affordable … or just an Act?

Small Groups

There was a rush of “early renewals” pushed by the carriers to “help” employers avoid the large expected rate increases which have now only been delayed until this December: 

1. Risk factors disappear, so those with .90 or .95 will see an increase to 1.0
2. Age banding disappears, so everyone will be a year older and get a higher rate
3. Individual age rates eliminate the employee advantage of covering an older spouse
4. Each child will get individually rated, so families with 3 or more children are penalized
5. New geographic rating factors will apply for all carriers and for all employees
6. Newer, streamlined plan designs will mostly put more medical costs on employees
7. Newer plan designs eliminate the “skinny plans” being sold – better plans cost more
8. The rate differential between old and young is reduced from 5:1 to 3: 1

If you have a group of 2 to 49 covered employees and have a low risk factor, a skinny plan, a younger workforce, disparate ages between spouses and families of medium to large size, you could see an overall rate increase this year of over 50%.  We have already seen increases, as carriers “map” employers to some of their newer plans, of over 90%.

Has your broker run the numbers for where you will be later this year?  With many carriers having frozen rate increases for the rest of the year, your December rates are available NOW.

Some have said “don’t worry – my plan is grandfathered” This would mean that the new rules don’t apply. True – unless your carrier no longer recognizes grandfathered plans (which includes Health Net, Blue Shield and Anthem Blue Cross). So worry.

If you are less concerned because you have a large group plan, where these rule changes won’t affect you, note that in 2016 that only applies if you have more than 100 employees.  The definition of “small group” changes on January 1 that year to include groups of 50-99. 

Small group plans must also contain certain benefits, such as full prescription drug coverage (so plans with “generic only” will be gone) and pediatric dental (even if you already have children covered under a group dental plan).  More benefits, more cost. 

Large Groups

The good news is that there is a delay in “pay or play” – the bad news is that they did not eliminate it, nor have they raised the requirement that all employees working 30 or more hours per week be given “affordable” (so the ACA is not about affordable for your company, but for your employees, courtesy of your company) coverage that contains essential health benefits.

They did delay the new mandate for groups of 50 to 99 employees until 2016, but reporting is still required in 2015.   It is comprehensive,  and includes detailing the information on coverage to each employee.  This will let them know if your plan “qualifies” under the mandate or not – and the government as well, who will fine your organization with non deductible penalties. 

All Groups – All Individuals

The ACA does nothing to curb medical inflation, and actually adds costs to the system. Medical inflation is caused by price increases, new technology and drugs, an aging population, building of the health care infrastructure, etc. Now there are three new taxes which carriers must pay – and therefore pass on to companies and consumers, which make up 3.5% of all premiums (even dental premiums will increase by 1.5% to cover the new taxes). There are also indirect costs added to the system, as pharmaceutical companies and medical device manufacturers must also pay new taxes – which are added to medical bills – increasing claims costs – and those bills are, of course, passed on to carriers which are then passed on to you.