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What if Small Businesses Evade ACA Regs?

Margaret Dick Tocknell, for HealthLeaders Media, February 22, 2012

Self Insurance
To self insure, a small firm must be willing to bear the risk of its employees' health. This is common among big firms with hundreds of employees paying premiums and sharing risk. Small employers who test the self insurance market are usually happy to be back in the fully insured fold.

A recent RAND Corporation analysis that appears in the February issue of Health Affairs supports the idea that neither self-insuring nor grandfathered health plans would have a major impact on the future cost of health insurance because relatively few businesses are likely to take advantage of either option.

At least that's the case if the current rules remain intact. Keeping the rules as they are written, especially the limitations on maintaining grandfathered plans, is key to keeping premiums affordable in small business insurance exchanges explains Christine Eibner, the study's lead author and a senior economist at RAND, a nonprofit research organization.

Using a microsimulation model, Eibner and her team looked at how grandfathering and self-insurance options could impact coverage and premium costs for policies sold through insurance exchanges set up for small employers.

If the rules for grandfathered plans were relaxed, then premiums offered to small employers through health insurance exchanges could be as much as 50% higher, according to the study. Eibner says she's not aware of any effort to make changes in those provisions.

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