The ACA is about to get more expensive. According to the WSJ, small businesses are increasingly opting to discontinue their insurance coverage for their employees, prompting those employees to purchase coverage on the ACA’s public exchanges. Since businesses that employ less than 50 people are exempt from the employer mandate, many of those dropping coverage will face no penalty for doing so. More:
In the latest sign of a possible shift, WellPoint Inc. said Wednesday its small-business-plan membership is shrinking faster than expected and it has lost about 300,000 people since the start of the year, leaving a total of 1.56 million in small-group coverage. […]Some other insurers have flagged a similar trend. Aetna Inc. Chief Financial Officer Shawn M. Guertin said the company was seeing “some erosion at the bottom of the market” among employers with two to 10 workers. Kaiser Permanente is seeing “some contraction” in the small-group market, particularly in places where insurers are offering cheap individual plans, said Joe Smith, the nonprofit’s vice president for small business.
This trend is important for one key reason: many of these workers replacing employer coverage with plans purchased in the ACA’s individual market will receive federal subsides to offset the cost of their premiums. In fact, the WSJ story states that the biggest predictor for whether a company discontinues its employee health care is directly related to subsidies. Companies in “lower-income industries” are the ones most likely to push their workers onto the exchanges—and those same workers are the ones most likely to qualify for subsidies. The upshot is that the federal government could be forced to issue more subsidies than it expected, thereby raising the cost of the law to the taxpayer past what experts predicted at the time of the law’s passage.That is just another way in which the law has changed in implementation, giving us a very different Obamacare than the one we were promised.