Small businesses pay higher premiums for buying coverage on health insurance exchanges because employers subsidized too many unhealthy individuals, research on employer-sponsored health plans in Massachusetts shows.
|
Seven years ago, Massachusetts passed a law that what would become the blueprint for the federal Patient Protection and Affordable Care Act. Now a study of employer-sponsored health plans in Massachusetts offers insight for the nation's workforce wondering what the future holds post-PPACA.
PwC's Health Research Institute has issued the first of two reports examining how businesses and workers have fared since the Bay state passed its universal coverage law.
This is neither the first nor the last study examining the sweeping healthcare reform in Massachusetts. The Kaiser Family Foundation issued a six-year report card in 2012 showing that the state's uninsured rate decreased while access to healthcare increased. This is what PPACA is supposed to do, too.
The President's re-election dampened the argument over why the nation needed PPACA, but how the country reaches the goal is still being debated by groups, such as the Association of Health Insurance Plans and most recently the Retail Industry Leaders Association. RILA represents the nation's biggest names in retail (and in some towns, employers): Walmart, Target, Dollar General, Walgreens, and others. The list reads like a yearbook of strip mall, big box, and retail corner tenants.
Along with the National Restaurant Association and the Food Marketing Institute, RILA sent a letter to North Carolina Republicans Robert Pittenger and Richard Hudson last week supporting their U.S. House bill to repeal the automatic enrollment mandate in PPACA. Both Pittenger and Hudson are freshmen members of Congress, without much power. But the bill may gain traction because the GOP is eager to dial back the PPACA, especially if many of country's largest employers are on board.
On behalf of its members, the trio wrote:
"We are concerned that automatic enrollment may create additional confusion for our employees in an already complex benefit area, and could result in unnecessary hardship if they find themselves automatically enrolled in a plan in which they do not wish to participate."
The letter was signed by 88 state and national business associations as well other retailers.
Under the PPACA, companies with more than 200 employees must automatically enroll their workers into health plans, unless an employee opts out of coverage. Employers with 50 or more workers will pay a $2,000—$3,000 penalty per employee for not offering health insurance coverage.
Here's the upshot: The Congressional Budget Office estimated in February that employer-sponsored insurance will decrease by 8 million people (3%) by 2019.
Overall, that's not what happened in Massachusetts, which also has employer mandates, though there are differences. For example, employers in Massachusetts with 11 or more workers pay just a $295 per employee penalty for not making a "fair and reasonable" contribution toward a worker's health insurance coverage.
The financial burden on companies under the healthcare law in Massachusetts is less, but they have to start offering health coverage help with a much lower threshold of employees—just 11 compared to 50 under PPACA.
Even with those requirements, PwC's HRI study found that under Massachusetts law, employer-sponsored coverage rose from 70.8% in 2006 to 72.1% in 2011 while the rest of the nation saw a decline in employer coverage by nearly nine percentage points.
But, the retailers and others are on to something. Dig a little deeper into the HRI's findings, and two of the three industries that saw declines in employer-sponsored coverage were retail and service. Service occupations saw a 5.1 percentage point decline; sales and related positions saw an 8% decline in coverage. The findings don't specifically speak to the industry's concern, but it does give them another, viable, talking point.
Like the health insurance exchanges that are being developed for 2014 now, the law in Massachusetts also provided an exchange for individual and small groups to buy health insurance. John Hurst, president of the Retailers Association of Massachusetts told PwC that small businesses paid a price (read: higher premiums) for buying coverage on the exchange because the employers subsidized too many unhealthy individuals.
Hurst called the move a "very big mistake," and the HIX dynamic in Massachusetts is one health insurers are wary of seeing happening nationwide next year.
But what HRI's also points out is that it is cheaper to include health coverage with an employee's salary because of tax exclusions. Employees also benefit, as the study's authors found take home pay increased when their companies offered health insurance.
The second report from HRI on the Massachusetts Experience will be out later in May, and will show possible implications for hospitals, physicians, and insurers.
Jacqueline Fellows is a contributing writer at HealthLeaders Media.