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Health Law Will Increase Costs for Most Small Businesses

The Centers for Medicare and Medicaid Services’ Office of the Actuary estimates that 65 percent of small businesses will see premiums rise under the federal health reform law, while rate reductions will be seen by the remaining 35 percent...
March 6, 2014

The Centers for Medicare and Medicaid Services’ (CMS) Office of the Actuary estimates that 65 percent of small businesses will see premiums rise under the federal health reform law, while rate reductions will be seen by the remaining 35 percent. The higher insurance costs can be attributed to new rules requiring insurers to offer guaranteed coverage and renewal options to small firms and preventing them from basing rates on the industry, employee age, and other factors. The agency estimates that of the 17 million people with health plans through small employers, 11 million will experience premium increases and 6 million will see premium declines. Officials expect a “negligible” impact on large employers, as most run their health insurance programs in-house.

CMS officials note that there is “a rather large degree of uncertainty associated” with their latest estimates, as the number of small businesses that offer health insurance going forward and how much they will pay for that coverage will depend on many more factors than the new rules analyzed in their report, including tax breaks for small firms and the success of new online insurance portals.

ACA Rules Will Increase Costs for Most Small Businesses (Washington Post 2/24/14)

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