Individuals signing up for medical care under the Affordable Care Act in the past year are generally sicker and require ever more expensive medical services. One bright spot: As a business owner, you're unlikely to shoulder the financial impact.
So says the Blue Cross Blue Shield Association (BCBS), which on Tuesday released a report on newly enrolled members in the health care market. The findings are important for small business owners, many of whom must now offer health insurance under an expanded employer mandate that took effect at the beginning of this year.
Workers who require more care may head to the exchanges to sign up for more generous plans than their company provides, according to Chad Meyerhoefer, an associate professor of economics specializing in health care at Lehigh University. "Most small business plans are limited, and it is essentially like negative selection," he says.
BCBS found the pool of people who signed up for its health care coverage in 2015 has greater care needs than the pools in previous years. The study noted a higher prevalence of customers with diabetes, hypertension, coronary disease, hepatitis C, and HIV infection, among other conditions. New enrollees also had more requests for medical services, including in-patient hospital visits, visits to medical professionals and emergency rooms, and prescriptions.
Yet medical costs for new individual enrollees were 22 percent higher than for people in employer-sponsored plans in 2015, BCBS found--individual enrollees' average monthly medical spending was $559, while employer-based group members spent an average of $457. The cost disparity is attributable to the market dynamics of providing care to individuals versus group coverage, the report suggests.
Still, not all small business owners could say the report accurately reflected their situation.
One new Anthem Blue Cross Blue Shield member is Richard Waryn, the co-owner and president of LDK Logistics, a 12-person logistics company in Denver. He says premiums for his employees went up more than 20 percent for 2016 compared with 2015.
But Waryn says his premium rate increases are a function of politics. Initially, he saw premiums for 2016 drop by 30 percent compared to the prior year, with a plan provided through the Colorado HealthOp, a state nonprofit cooperative. The cooperative lost funding through a federal "risk corridor" program, reportedly shut down by congressional Republicans in October. The program had helped networks take on members with the greatest health care needs. Without the funding the coop closed, reportedly stranding 83,000 members, including LDK.
"We have ended up with an increase in premiums and worse service," Waryn says.
As of January 1, the ACA requires businesses with 50 employees or more to offer qualified health care plans, or face tax penalties. Such plans must meet minimum levels of care as set out by the federal government, and they can't exclude customers for pre-existing conditions.
For 2015, the average premium for employer-sponsored family coverage among firms with fewer than 200 employees increased 5 percent to $16,625 compared with the prior year, according to the 2015 Employer Health Benefits Survey, put out by the Kaiser Family Foundation.