Premiums May Rise as Businesses Drop Health Care Plans

REUTERS

Health insurance premiums could rise for many Americans as businesses are facing incentives to stop offering health insurance to their employees, National Journal reported on Thursday.

For the vast majority of Americans, premium prices will be higher in the individual exchange than what they're currently paying for employer-sponsored benefits, according to a National Journal analysis of new coverage and cost data. Adding even more out-of-pocket expenses to consumers' monthly insurance bills is a swell in deductibles under the Affordable Care Act.

Health law proponents have excused the rate hikes by saying the prices in the exchange won't apply to the millions receiving coverage from their employers. But that's only if employers continue to offer that coverage—something that's looking increasingly uncertain. Already, UPS, for example, cited Obamacare as its reason for nixing spousal coverage. And while a Kaiser Family Foundation report found that 49 percent of the U.S. population now receives employer-sponsored coverage, more companies are debating whether they will continue to be in the business of providing such benefits at all.

Economists largely agree there won't be a sea change among employers offering coverage. But they're also saying small businesses are still in play.

The penalty for not providing health insurance plus the cost of health insurance through the exchanges—which will be subsidized for lower income workers—will likely be lower than the cost to many businesses of providing health insurance itself, the National Journal said.

The health insurance offered through the exchanges might also be more comprehensive than what businesses can offer, the National Journal reported.

The reforms in Massachusetts, which are similar to Obamacare provide little comfort: "The drop-off in employer coverage [in Massachusetts] paralleled an increase in premiums, which rose 80 percent for families and 74 percent for singles in the last 10 years, [a] Kaiser study found."

Whether the quality of care in the new market is comparable to private offerings remains to be seen. But one thing is clear: The cost of care in the new market doesn't stack up. A single wage earner must make less than $20,000 to see his or her current premiums drop or stay the same under Obamacare, an independent review by National Journal found. That's equivalent to approximately 34 percent of all single workers in the U.S. seeing any benefit in the new system. For those seeking family-of-four coverage under the ACA, about 43 percent will see cost savings. Families must earn less than or equal to $62,300, or they, too, will be looking at a bigger bill.