As PPACA was being concocted, one of my greatest concerns was that I saw very little in the legislation itself which would provide much of a benefit for a segment of the market most in need of constructive reform: the small group market, especially companies with fewer than 25 employees, and especially groups with 10 or fewer workers. This has traditionally been a market segment which is both overpriced and under-served.
And with pressure on insurers to reduce administrative costs, it seemed that small businesses, which are relatively expensive to sell to and service, would readily be abandoned by insurers and brokers in search of bigger fish. My fear was that small businesses would take it in the proverbial teeth, saddled with additional costs due to the broad-based insurance reforms, but with few benefits to offset the aggravation. And it seemed to me that insurers would readily abandon the small group marketplace, making their "big bets" that small business owners would be quick to dump their plans and push their employees onto the public exchanges, with the subsidies they would provide.
It struck me then that the "reformers" had very little knowledge of the issues besetting small business owners in the "micro-group" niche, about half of whom are struggling to provide some sort of health coverage for their workers and their families. The prevailing wisdom in political circles is that small businesses are either greedy, denying their employees access to health coverage, or ignorant, and needing to be "encouraged" by government to "do the right thing."
So I asked very early on...who is speaking for small business?
With the announcement yesterday that the Obama Administration had decided to push the employer mandate for companies in the 50-99 market out past the 2014 elections, it's clear that small business owners must not have very good lobbyists; since they're sort of out in the cold...The Little Cheese That Stands Alone.
Because, while companies with fewer than 25 employees will not be required to purchase and pay for coverage for their employees, those that wish to are going to face an administrative nightmare in about six short months...and nobody...insurers, brokers, and especially small business owners...is prepared to deal with the shitstorm which will engulf the small business market beginning in October.
And it's not clear to me that either our political "leaders," nor those in the industry, are terribly concerned.
What's gonna happen?...
Thousands upon thousands of small businesses have had their plans "grandfathered" by their insurers, even though the plans didn't adhere to PPACA requirements.
Thousands upon thousands more have accepted two-year rate renewals, with an eye toward postponing "rate shock" till 2015.
Starting in the fourth quarter of 2014, all these groups will need to be re-sold.
If these small businesses wish to continue to provide health coverage to their workers, the plans they offer will have to comply with ACA regulations. That means new plan designs, which will be expensive.
They'll probably be looking at their workforces in light of the requirement that "full-time employment" be re-defined at 30 hours per week. (This may not be as catastrophic as some critics have suggested. In the past, when managing a very large small business health plan, our groups audits found that the most commonly-broken rule was enrolling less-than-full-time employees on the company's health plan. We tried to accommodate this by modifying our carrier contracts to provide some flexibility in defining "full-time employment" down to 30 hours per week. As long as companies provided coverage to all their qualified employees working 30 hours per more per week, they were okay with us. Same with 35 or 40 hours per week. All we asked was that the companies be consistent in their treatment of workers).
And thousands upon thousands of small businesses, whose rates had been set based on health underwriting, will have to be re-rated using community-rating criteria. In general this will make coverage more expensive for younger, healthier workers and slightly less expensive for older workers, and those with health conditions.
Unless the White House gets smart very quickly, this is going to mean a huge amount of chaos in the small group market.
Want to be whether Healthcare.gov will be ready? Because it's not right now. Even with the "front end" vastly improved over launch, the "back end" functions...billing, enrollment, defined contribution or other premium-sharing functionality...are very likely just a glimmer (maybe a glaze) in some programmers' eyes.
Insurers certainly aren't ready. Having snapped out of their Obamacare-denial reverie in early 2013, their first effort involved getting (sort of) ready for the onrush of individuals hitting the exchange market. The widely-decried outrage over Healthcare.gov's launch provided a lot of cover for private insurers whose "exchange" technology was not ready for prime time, either. Most of them are still processing applications on paper and/or over the phone.
Where are the "private exchanges?" In general, most of the "big name" exchange operators...Mercer, Towers Watson, Aon Hewitt...are chasing low-hanging fruit...Their "exchanges" are largely amped-up third party administration platforms with a new label. And they're chasing large, self-insured groups with a lot of retirees first. They won't be in the 50-99-employee group space for at least another year, if ever, and they've never really had an interest in the fewer-than-25-employee small group market.
The biggest exchange e-brokers, like eHealth and GoHealth, started their lives as brokers in the individual market. That's where their expertise is, and where they've made their money. They might be thinking about the small group market, but they're very busy sticking to their knitting. Hard to see them ready to jump in six months from now.
The limited number of players with small group functionality are mostly broker utilities, developed to assist brokers in managing their own books of business. Will they have the ability, or the willpower, to leap over the hordes of middlemen and go directly to the small business owner/operator in an exchange-type direct-to-consumer environment?
Again, wanna bet?...
It'd be a real shame if PPACA, which, at least rhetorically, was supposed to make health coverage easier to access and more affordable for small businesses and their workers, instead undermined and destroyed the small group health insurance market.
But unless I'm very wrong, the coming shitstorm is gathering which could do just that.
So, if I'm wrong, for Gawd's sake, enlighten me...
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