Some Small Firms Try Early Insurance Renewal to Blunt Health Law - UnitedHealth and Humana Will Offer Smaller Businesses Options Typically Left to Big Corporations
From The Wall Street Journal:
As businesses cast about for ways to minimize new costs related to the federal health law, health insurers are stepping up. Among their latest offerings: allowing ever-smaller companies to switch to a riskier form of coverage traditionally favored by big employers.
UnitedHealth Group Inc. and Humana Inc. will begin offering smaller employers—including firms with as few as 10 members in UnitedHealth's case—the option of so-called self-insurance in some markets later this year. Self-insured businesses pay their workers' medical costs directly, instead of joining a traditional managed-care plan. Usually, they hire benefits firms or insurance companies just to administer their plans.
Most big companies choose the approach, because it gives them more control over benefits and can lower costs.
For small businesses, being self-insured would let them avoid new requirements under the law that call for traditional small group plans to include richer benefits, such as mental-health and maternity care. Self-insured companies can also avoid changes to pricing rules that could increase costs for groups of healthy workers.
It comes with risks: A car accident or cancer case can leave small businesses on the hook for big medical bills. That is why most large insurers have generally offered such services to companies that have 100 or more workers and can spread the costs around.
The approach is part of a growing playbook of strategies to minimize the effects—and potential costs—of the health law. Insurers are also letting small companies renew their yearlong health-benefit plans early, before the end of 2013. That would delay the impact of health-law provisions that broadly kick in on Jan. 1, but would only affect plans once they renew after that date.
Some regulators worry the tactics, if they catch on widely, could undermine the exchanges—online insurance marketplaces for small businesses and individuals that are a centerpiece of the law. Starting next year, the law will block insurers from setting rates for businesses with fewer than 50 or 100 workers, depending on the state, based on how healthy they are. The exchanges are supposed to help spread around the risk, and cost, of coverage.
As businesses cast about for ways to minimize new costs related to the federal health law, health insurers are stepping up. Among their latest offerings: allowing ever-smaller companies to switch to a riskier form of coverage traditionally favored by big employers.
UnitedHealth Group Inc. and Humana Inc. will begin offering smaller employers—including firms with as few as 10 members in UnitedHealth's case—the option of so-called self-insurance in some markets later this year. Self-insured businesses pay their workers' medical costs directly, instead of joining a traditional managed-care plan. Usually, they hire benefits firms or insurance companies just to administer their plans.
Most big companies choose the approach, because it gives them more control over benefits and can lower costs.
For small businesses, being self-insured would let them avoid new requirements under the law that call for traditional small group plans to include richer benefits, such as mental-health and maternity care. Self-insured companies can also avoid changes to pricing rules that could increase costs for groups of healthy workers.
It comes with risks: A car accident or cancer case can leave small businesses on the hook for big medical bills. That is why most large insurers have generally offered such services to companies that have 100 or more workers and can spread the costs around.
The approach is part of a growing playbook of strategies to minimize the effects—and potential costs—of the health law. Insurers are also letting small companies renew their yearlong health-benefit plans early, before the end of 2013. That would delay the impact of health-law provisions that broadly kick in on Jan. 1, but would only affect plans once they renew after that date.
Some regulators worry the tactics, if they catch on widely, could undermine the exchanges—online insurance marketplaces for small businesses and individuals that are a centerpiece of the law. Starting next year, the law will block insurers from setting rates for businesses with fewer than 50 or 100 workers, depending on the state, based on how healthy they are. The exchanges are supposed to help spread around the risk, and cost, of coverage.
posted by Sid Cottingham | 6:22 AM
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