Large Employers May Stop Offering Health Insurance Plans

A lot of people who get their health insurance from their large group employers might just be searching for insurance coverage elsewhere soon.  While it certainly wasn’t the intention of the Affordable Care Act to make it more difficult for employers to offer insurance to their employees, that has been an effect of the health insurance mandate often referred to as Obamacare.  In the Forbes article, “Obamacare Increases Large Employers’ Health Costs“, Sally Pipes tells us about recent study findings.  S&P Captial IQ’s study determined that 90% of workers in America who currently have health insurance through a large employer will be searching for a policy in the government exchanges by 2020.  That figure seems extreme, but the harsh reality is that the taxes, fees, and added insurance mandates placed on large employers are hurting them.  Many of these employers simply don’t think that they can afford to offer health insurance if something doesn’t change.  They are currently mandated to offer you health insurance plans, so that is something that will have to be considered as well.

Group health plan sponsors pay a new fee to help fund the government sponsored Patient Centered Outcomes Research Institute (PCORI).  This organization tests the effectiveness of certain medical treatments and Medicare uses the results to determine what they will cover for their patients.  Some skeptics worry that results could be twisted to support lower cost treatments over more effective, but higher cost ones.  Another fee that large employers have to pay is a Temporary Reinsurance Fee.  This fee is supposed to stabilize premiums in the individual health insurance marketplace.  The American Health Policy Institute estimates that $15.3 million will be collected by this fee in just two years.  In 2018, large employers will start paying a 40% excise tax on health insurance plans that are deemed “expensive”.  Individual premiums above $10,200 and family premiums above $27,500 are considered “expensive”.  One company estimates that this excise tax will cost them $378 million over the course of five years.

In addition to the direct taxes, there are indirect tax increases for employers as well.  There is the mandate for companies to offer health insurance to full time workers within the next year or two.  If they don’t, they will pay a fine.  Companies also have to allow children to remain on their parents’ health insurance until the age of 26 now.  That last mandate alone has increased employer insurance costs between 1 and 3%.  Mandating full coverage of preventative care services, such as immunization and birth control is drastically increasing employer health care costs as well.  The AHPI survey estimates large employer health care costs to rise by 4.3% in 2016, by 5.1% in 2018, and increase by 8.4% in 2023.  This equates to hundreds of billions of dollars extra that large employers will have to shell out over the next decade or so.

Unfortunately, what this means to Americans with health insurance from their large employer is that their costs will likely increase as well.  More than 80% of large employers have already increased their employees’ deductibles, or plan to do so soon.  Some employers might stop offering health insurance altogether and pay the fine for not offering plans.  They might actually save money by doing that, although employee morale could decrease from such a move.  Companies may also offer incentives for sick employees to search for health insurance in the exchanges instead of using the company plan, saving both the employer and employee money.  But if all of the sickest employees head into the health insurance exchanges, costs within those will increase for everyone.  The potential destruction of employer health insurance plans was certainly not a goal of the Affordable Care Act, but it might just be a consequence.  If you are worried about losing your employer health insurance, you can compare health plans and rates here.

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