Like many, I’ve been surprised that the rollout of the Affordable Care Act has had such an impact on Massachusetts. After all we already had near universal coverage, an exchange/marketplace, lots of mandates, guaranteed issue and community rating. Obamacare is based on Romneycare. But somehow Massachusetts screwed up the rollout of the Obamacare exchange, which is costing $100 million to fix, and at least some Massachusetts small businesses are getting hit with big rate hikes as they renew.
One small business I know got hit with a 29 percent premium jump, almost all due to the ACA. Here’s how a Blue Cross actuary explained it:
- Blue Cross has alway developed its rates for the merged individual/small group market by rating each member based on age and location. Industry and company size have also factored in
- However, prior to 2014 Blue Cross only counted the first 2 kids plus adults when doing the rating
- The ACA mandates a similar approach, but now Blue Cross has to count the first 3 kids in the family. In addition, if a son or daughter aged 21-26 remains on the plan, that individual is counted as an adult along with up to 3 kids
- For this particular business with the 29 percent jump, the shift in the counting of number of kids boosted the premium by about 25 percent
- The other 4 percent was mostly related to aging of the members plus the inclusion of pediatric dental benefits in the medical benefit, again as required under the ACA
- The ACA requires Blue Cross to phase out its reliance on company size and industry rating factors over time. That effect was basically neutral for this customer, whose premium rose about 3 percent based on the phase out of the industry factor and went down 2.5 percent based on phasing out of the company size factor
The silver lining, if any? There shouldn’t be any serious changes in premium for next year’s renewal.
I’d heard about similar premium increases for other small businesses and non-profit organizations, including those that I don’t think are facing the family size issue. But maybe I’ve just heard from those who’ve been hit hard and others are not seeing increases.
Is your Massachussetts small business healthcare premium skyrocketing next year? Is it staying flat? I’d love to hear from you in the comments or via Twitter @HealthBizBlog.
July 24, 2014