Rules that allow some small employers to avoid regulation under health reform are unlikely to have a major impact on the future cost of health insurance unless those rules are relaxed to allow more businesses to opt out.
Analysis by the RAND Corporation of two rules that allow small businesses to avoid participating in health reform concludes they will have only a minor impact because few businesses are likely to take advantage of the options. Findings were published in the February issue of the journal Health Affairs.
“We found that keeping the rules as they are written, particularly the limitations on maintaining a grandfathered plan, will be essential to keeping premiums affordable in small business insurance exchanges,” says Christine Eibner, the study’s lead author and a senior economist at RAND, a nonprofit research organization.
Beginning in 2014, under the PPACA, insurers will be able to set premiums higher or lower for enrollees at small businesses based only by the enrollees’ age, family size, geographic location and whether they use tobacco. Factors such as gender, health status or previous claims history will no longer be allowed to affect premiums.
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The goal of these strategies is to spread the financial risk associated with insuring unusually sick or high-cost enrollees across a wider pool of employers and employees.
There have been concerns that such cost sharing could be undermined if small employers with relatively healthy workers and dependents avoid the new regulations by self-insuring or by maintaining grandfathered health insurance plans—two options that allow them to avoid regulation under the PPACA.