For months now, business owners have been fretting about what the implementation of the Affordable Care Act will do to the cost of their health insurance premiums. Well, on April 1, Vermont became the first state to release proposed rates for its state insurance exchange, which will serve individuals and small businesses. And the news was unexpectedly good.
The 2014 proposed rates filed by Blue Cross Blue Shield of Vermont and MVP Healthcare, the two companies selected to provide coverage on the state’s exchange, are comparable to and often slightly lower than those that small employers currently pay. Under the proposed 2014 pricing, for example, the monthly premium for a hypothetical small company covering seven employees and their dependents drops from $12,800 to $10,000 per month. Plus, the plans generally include better benefits for the money.
“This is what we’ve been wondering about since the ACA was enacted—what am I going to pay as a business,” says Eileen Elliott, an attorney specializing in health-care law at Burlington, Vermont firm Dunkiel Saunders. “There was a lot of fear that this is really going to drive up costs. It was surprising for me that the rates were so low.”
Of course, Vermont isn’t exactly like the rest of America (Bernie Sanders, anyone?). It has a history of progressive healthcare policy. Community rating, which prohibits insurers from varying rates based on health status, went into the effect in the state in the mid-90s, and insurers already have been required to meet most of the ACA’s other requirements. What’s more, in 2014, Vermont will be unique among all 50 states in requiring all individuals and businesses with 50 or fewer employees to buy health benefits through its state-run exchange, guaranteeing a critical mass of bodies.
For these reasons and more, Elliot says, “I’m not sure rates here will necessarily translate to other places. But I think they show that it might not be the scary scenario that many small businesses fear. There’s got to be a sigh of relief, in some places, that this could really work out.”
States like Massachusetts and New York—which, like Vermont, already require coverage of preexisting conditions—might see similar results in their 2014 premiums. Employers in states with looser coverage requirements, on the other hand, might be in for a bigger jolt.
Nonetheless, Larry Levitt, co-executive director of the Kaiser Family Foundation’s Initiative on Health Care Reform and Private Insurance, says the Vermont news is cause for some degree of optimism. “These rates are good indicator of rates we may see elsewhere in 2014,” Levitt says. “They’re in line with the national averages that the Congressional Budget Office originally estimated. That’s comforting.”
Stay tuned as more states to release details on their exchanges over the next couple of months. Meanwhile, yu can check out 2014 proposed rates for Vermont’s state health exchange here: http://www.dfr.vermont.gov/insurance/preliminary-rate-filings-vermont-health-connect