Upcoming changes under Obamacare aren’t likely to force smaller companies to severely hike the premiums they charge their workers, according to a new study from the nonprofit research group Rand Corporation. The study’s results are in contrast to doomsday predictions that the health reform law’s requirements will put too much of a burden on business owners, causing their employees’ health costs to skyrocket.
“The rate-shock concerns were overblown,” Christine Eibner, a senior economist at Rand Corporation, told USA Today. “It’s likely the effect will be small.”
Rand’s report examined small business owners employing fewer than 100 workers. Researchers found that under the health reform law, the workers at those types of companies are actually projected to pay almost six percent less in premiums in 2016 than they would without Obamacare, saving an average of $355. According to the report, the national average for premiums under Obamacare will be $5,837, while the average for an equal plan would be $6,192 without the law.
The researchers didn’t examine the premiums at firms larger than 100 workers. But Eibner explained that although it’s difficult to perfectly predict future premiums, she expects that larger firms should “see little change” in their premium costs beyond the typical annual increases.
That doesn’t mean premiums won’t jump at all — indeed, the cost of health care has been increasing for years, and workers’ contributions to their health plans have been steadily growing. But much of that is due to the high costs of health care itself, as well as companies’ persistent attempts to save money by shifting costs onto their workers, and not the health law itself. In fact, there’s evidence that Obamacare is already helping to slow the rising cost of health care.
Business owners agree that it’s difficult to predict how exactly the health law will affect their costs. Nonetheless, the media coverage in the lead-up to the law’s implementation has mainly focused on companies that believe Obamacare will hurt them. Businesses have warned they may need to cut back on workers’ hours or decide against hiring more workers because of the high cost of providing health care for them under Obamacare’s new standards, which stipulate that firms with more than 50 workers must extend a minimum level of coverage to their employees.
But health industry experts say that Obamacare probably won’t be directly to blame for increasing companies’ health costs. That’s partly because the changes under the health law have a bigger impact on the Americans buying individual plans in the state-level marketplaces, and not as much of an impact on the people who already get health insurance through their employer. It’s also because many companies already cover the benefits that are required under the law — like doctor’s visits, emergency care, mental health services, and prescription drugs — so they won’t have to make changes to the plans they offer.
There are some exceptions. If companies have been offering incredibly skimpy coverage to their workers and will need to extend additional benefits under Obamacare, that will make premiums rise. (Of course, that will also mean their employees are receiving adequate coverage, when they weren’t before.) And small firms that employ only young, healthy workers may see larger premium increases than those that have older and sicker workers.
In addition to fears over “rate shock” for workers who get their insurance through their employers, there’s also been significant speculation about high premiums in Obamacare’s upcoming insurance marketplaces. But outside analyses of the future premiums on the state-level marketplaces have found that they’ll actually be lower than expected, largely because the new system will encourage insurers to compete with each other and drive down costs on their own. Last month, the Obama Administration also reported that premiums for the marketplaces in 11 different states will be lower than originally anticipated. States like New York, Oregon, Montana, California, and Louisiana have all reported that they expect drops in their premium prices under the health reform law.