MFA finds steep drop in small health group count

Has the number of small plans really fallen 24 percent in just two years? Has the number of small plans really fallen 24 percent in just two years?

The number of small employers with group health plans may be shrinking rapidly.

Analysts at Mark Farrah Associates (MFA) have included that finding in a report based on an analysis of health plan market data it collects.

The number of people in fully insured U.S. small-group health plans fell to about 18 million in 2012, down 3.2 percent from the 2011 total, the analysts said in the report.

But the number of small-group plans fell to about 1.5 million, down 8.8 percent from the 2011 small-group plan count and down 24 percent from the 2010 plan count.

Debra Donahue, an MFA analyst, said reporting changes or other data challenges could be responsible for some of the apparent drop in the small-group plan count.

Donahue said some small employers may be shifting to self-insured health plans. But the number of plans seems to be dropping faster than the number of plan enrollees, suggesting that very small groups may be leaving the group health market faster than groups that are large enough to consider self-insuring.

But other reasons could include the effects of the soft economy and carriers' need to focus attention on preparing for major Patient Protection and Affordable Care Act (PPACA) changes that will take effect in 2014, Donahue said.

Rate increases were probably not a major factor, because small-group rates rose just 2.3 percent in 2012, the analysts said. 

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