Obamacare to Raise Premiums for 65 Percent of Small Businesses

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BY Ray Hennessey

The government says that roughly two-thirds of small businesses in America — and their employees — will see an increase in health-insurance premiums under Obamacare.

A report from the Centers for Medicare and Medicaid Services looked at the new rules facing insurers under the Affordable Care Act, namely the inability to charge premiums based on factors like the health of their employees. Small businesses have always seen a high variability in premiums because of worker health. Since they don’t have many employees, just one worker who is ill can raise premiums for the whole organization.

However, most small businesses employ young, healthy workers — people who wouldn’t otherwise be charged high premiums for insurance. Under Obamacare, however, the good health of employees will not be a factor in setting rates, so the majority of small businesses will see premiums go up. The government estimates that 65 percent of small businesses will see rates rise.

Related: Obamacare Mandate for Many Businesses Pushed Back a Year

What’s more, since most small businesses make their workers contribute to their own health coverage in some way, as many as 11 million individuals could see their own premiums rise, too.

It is unclear how much the rates will go up. The report makes no mention of the magnitude of any increases, either for small businesses or for their employees. However, the White House has consistently argued that Obamacare would lower rates for small businesses by 4 percent, not raise it for the vast majority of small companies.

The Centers for Medicare and Medicaid Services report notes the numbers may not pan out, though — primarily because some companies may decide to drop health insurance altogether. That would force the employees into individual health exchanges. “There is a rather large degree of uncertainty associated with this estimate,” the report notes.

Related: How Both Parties Were Wrong About Obamacare and Jobs

Tags: ObamaCare