We are about two weeks from the supposed opening of the exchanges and people are all on the edge of their seats awaiting the collective action of millions of consumers and thousands of businesses. We have already seen a widespread move by employers to increase the number of part-time employees for whom they do not have to provide health care. An article in Health Affairs explores the likely impact of higher than expected insurance premiums on employer and employee behavior. (HA Article) For persons who get insurance on the exchanges, extensive subsidies are available if their incomes are between 133% and 400% of poverty level. These subsidies are a net outlay by the federal government. The cost of these subsidies is, and likely will remain, significantly higher than any penalty from employers who don’t provide mandated health coverage, and there are a lot of employers who are under the size to which the mandate applies. Right now, the Congressional Budget Office is projecting that 25 million people will get exchange coverage in 2017 and 20 million of those will get some subsidy. The authors point out that if health insurance premiums cause employers to not provide coverage or increase employee contributions and instead let or encourage people to go to the exchanges, those numbers and the cost to the federal government could climb significantly. Not only will many employers save money by ending health insurance coverage, but some employees would be better off as well if they got subsidized coverage on an exchange. Using MEPS survey data in a model they created, the authors conclude that a small change of just $100 in premium contributions could lead to an additional 2.5 million people on the exchanges and additional federal costs of $6.7 billion. Given the extent of cost-shifting which continues to occur in employment-based health plans, as well as likely cost increases resulting from the reform law, the actual effect could be multiples of this.
Health Insurance Premiums and Exchanges
By Kevin RocheSeptember 23, 2013Commentary
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About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
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