Study: Small businesses dumping employee health insurance

This Oct. 15, 2014 file photo, a screen shot shows the home page of HealthCare,gov, a federal government website managed by the U.S. Centers for Medicare & Medicaid Service. (AP Photo, File)

GRAND RAPIDS, Mich. (WOOD) — A new survey released Thursday by Grand Valley State University is showing that since the Affordable Care Act was implemented, more small businesses are deciding not to offer health insurance to their employees.

The survey, conducted by Assistant Professor of Economics Leslie Muller, focused on companies that have fewer than 50 employees. Companies of that size are not mandated by the ACA to offer insurance to employees.

“Small firms have faced, traditionally faced, higher costs so they’ve been strapped for a while. That doesn’t necessarily have anything to do with the ACA it just has to do with the fact that health care costs have been raising it’s been particularly hard on the small firms,” Muller said.

The Survey found that of small businesses that offered health insurance over the past two years, only 40 percent plan to offer insurance in 2015 and only 28 percent in 2016.

“I’m not saying these escalating health care costs are due to the ACA. We just don’t know that. We don’t know what’s going to happen because it’s going to take a couple of years for the markets to play out, even out,” Muller said.

In fact, Muller says the survey suggests small business may be dropping their health insurance coverage because of the availability of the public health exchange.

68 percent of the small businesses that do not plan on offering insurance in 2015 are encouraging their employees to purchase health insurance on the public exchange.

“It just now gives them another option I think as to what they can do if they become particularly strapped in money for offering health insurance,” Muller said.

Muller said some workers may end up better off on the exchange, since individuals who earn up to 400% of the poverty level are eligible for federal subsidies, which they wouldn’t get if their employers offered them health insurance.

“Especially those people that pre-existing conditions, can now go out into this public exchange that the ACA put together and buy insurance and they are not discriminated against because of pre-existing conditions. That was not available before,” Muller said.

Other findings of the survey:

  • Of  those offering plans in 2014, 75 percent plan on offering insurance in 2015. Half of these firms plan on offering plans in 2016.
  • Sixteen percent of firms are uncertain as to whether they will offer insurance in 2015;  28 percent are unsure about 2016.
  • Of  those  companies  not  offering  plans  in  2015, 68 percent plan on sending employees out to the public exchange to buy individual health insurance.



Read the entire survey (pdf)

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