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Obamacare’s open enrollment period just ended, however, insurance companies are already planning for 2015. There are some indications that the Patient Protection and Affordable Care Act won’t live up to its promise of reducing health plan costs. As a result, small businesses could be slammed with massive health plan cost increases.
Scott Gottlieb of the American Enterprise Institute reports on Morgan Stanley research on possible skyrocketing premium hikes:
Health insurance premiums are showing the sharpest increases perhaps ever according to a survey of brokers who sell coverage in the individual and small group market. Morgan Stanley’s healthcare analysts conducted the proprietary survey of 148 brokers. The April survey shows the largest acceleration in small and individual group rates in any of the 12 prior quarterly periods when it has been conducted.
The average increases are in excess of 11% in the small group market and 12% in the individual market. Some state show increases 10 to 50 times that amount. The analysts conclude that the “increases are largely due to changes under the ACA.”
Small businesses that buy health insurance in the small group market in these states could see the biggest premium increases:
- Washington 588%
- Pennsylvania 66%
- California 37%
- Indiana 34%
- Kentucky 30%
- Colorado 29%
- Michigan 27%
- Maryland 25%
- Missouri 25%
- Nevada 23%
While not as dramatic as Morgan Stanley’s research, the Washington Free Beacon reports that in Hawaii, 8,100 small businesses could possibly see their premiums increase by 12.8% because of Obamacare. This proposed rate increase would affect the majority of the 77,000 small business workers covered under the Hawaii Medical Service Association, according to the report.
When asked by House Members last month about insurance premium increases, Health and Human Services Secretary Kathleen Sebelius said, “I think premiums are likely to go up, but go up at a slower pace.”
Would Secretary Sebelius care to place a wager on that?
The Obamacare experiment of costly mandates and regulations may have just begun. However, the promise of lower health costs isn’t panning out, and small businesses could bear the burden.
“There are certain regulations and certain requirements that had to be in there. And because of that it’s driven up the costs of these benefits,” says John DiVito of the Flexible Benefit Service Corporation, which represents hundreds of agents.