The implementation of the ACA – The Affordable Care Act will impact employers of all sizes. The small group health insurance market, currently serving firms 2 to 50 employees, will change significantly.

California is home to 610,000 small businesses that employ over 5.3 million people, and another 2.8 million small businesses with no employees, according to the UC Berkeley Center for Labor Research and Education. Because they do not have the bargaining power to negotiate low prices on health insurance, many small business owners have trouble attaining affordable insurance for their workers and themselves.

Under existing California law that dates back to the early 1990s, insurers are required to sell coverage or “guarantee issue” of coverage to small businesses with 2-50 employees. Rates may vary by plus/minus 10% depending on the health status of the employees as well by age, geographic region and family size.

Federal health reform modifies these rules in several key ways:
•Eliminating pricing of premiums based on health status
•Limiting the range of premiums based on age to no more than 3:1: that is, tho

se ages

60-64 can only be charged three times as much as those aged 20-29.
•Adding the self-employed to those eligible for guaranteed issue of coverage
•Expanding the rules to employers with

up to online casinos 100 employees

Federal law also permits non-smoker discounts and “wellness incentives”.

Passage of California AB 1083 modifies (for California) federal health reform. by changing the rules for small “group” or small business coverage by:

Eliminating pricing of premiums based on health

status

Limiting the range of premiums based on age to no more than 3:1:

that is, those ages 60-64 can only be charged three times as much as those aged 20-29.

Adding the self-employed to those eligible for guaranteed issue of coverage

Expanding the rules to employers with up to 100 employees

Consistent with existing California law, AB 1083 does not permit different charges based on health status, including smoking, wellness, etc.

These changes aim to make health insurance more available to million of businesses. The proof, wil be in the forthcoming release of rates and plans by insurers, and public/private exchanges.

By Chad Terhune
10:00 AM PDT, March 28, 2013

The federal healthcare law will help cause insurance premiums to rise 30% on average for many middle-income Californians next year, but lower-income consumers could save up to 84%, a new government report says.

Covered California, the state agency that commissioned the report issued Thursday, said federal subsidies and decreases in out-of-pocket medical expenses should offset most of the higher premiums for people buying their own health coverage.

Officials said about 570,000 Californians who have annual incomes between 250% and 400% of the federal poverty line and have individual policies now will pay 47% less, on average, due to federal subsidies.

These state estimates offer the first detailed look at how healthcare costs may change for millions of Californians next year and the various factors that will affect families' overall medical expenses.

The affordability of coverage will play a pivotal role in whether California can successfully implement President Obama's Affordable Care Act and reach the goal of extending coverage to many of the state's 5.6 million uninsured residents.

Even supporters of the federal overhaul have expressed concern that the government requirement for richer benefits and new consumer protections will drive up premiums too high.

“It is critical for us to understand the true financial impact on Californians as we move toward 2014, and this is an important step in determining strategies to help protect consumers from cost increases,” said Peter Lee, executive director of Covered California. “There may be increases in premiums depending on what product people buy.”

These changes would most immediately affect the 2 million Californians who purchase their own coverage and the state’s uninsured residents.

This analysis by the Milliman consulting firm did not look at premiums for the 19 million Californians who receive health benefits from larger employers. The federal law has a smaller effect on those plans.

Next month, health insurers must submit their proposed rates to the state for coverage starting Jan. 1. Covered California plans to select certain companies for its state-run exchange and negotiate rates by mid-

May.

Insurance industry officials said they support the state's efforts to expand and improve health coverage, but those changes carry a price.

“These richer benefits, more predictable coverage and subsidies come at a cost,” said Patrick Johnston, president of the California Assn. of Health Plans. “All these expansions add to the already increasing cost of care.”

In California, individuals earning up to about $16,000 will qualify for an expansion of Medi-Cal, the state's Medicaid program for the poor and disabled.

Beyond that, people and households earning up to 400% of the federal poverty level are eligible for federal subsidies. That income threshold goes up to about $46,000 for an individual and $94,000 for a family of four.

Without subsidies above those income levels, the report said, consumers face 30% higher premiums and a 20% increase in their total cost of medical care when lower deductibles and cost sharing are factored in. Families earning less than $60,000 a year fare much better, in line to save 84% on premiums and 76% on the total cost of their care.

Age is another dividing line. The report estimates that young people under 25 could incur premium increases that are 25% higher than average, while older consumers could face a smaller increase, of 12%, under new limits on how much rates can vary based on age. Milliman said younger consumers stand to earn less and many will qualify for subsidies that help mitigate higher rates.

Absent any changes from the federal law, Milliman said individual premiums in California would increase 9%, on average, in 2014 due to rising medical costs and other factors.

In January, most Americans must purchase health insurance or pay a penalty under the federal law.

The Milliman report attributed much of the cost increase overall to the new guaranteed coverage for all applicants, including sicker patients who were previously denied insurance. Adding those higher-cost policyholders is expected to increase medical costs.

New federal requirements that individual policies cover a higher percentage of overall medical costs and include 10 “essential health benefits,” such as prescription drugs and mental health services, also contribute to higher costs.

Major insurers surveyed about potential premium increases in six major markets expect premiums to increase by an average of 169 percent in 2014 for younger and healthier individuals.

American Action Forum asked insurers about the impact of the Affordable Care Act (ACA) in the Chicago, Phoenix, Atlanta, Austin, Milwaukee and Albany markets. Despite variation by geography,

the overall trend showed that younger and healthier male individual policyholders are expected to see the highest premium insurance, 189 percent, in 2014.

The survey (PDF) does note that since individual premiums can be as low as $50 a month for young and healthy individuals, an increase can appear very large when measured on a percentage basis. The trends for young and healthier individuals also applied f

or small employers with a predominantly younger and healthier work force.

For older and less healthy individuals, premiums are predicted to decline by an average of 22 percent while small group premiums for employers with older less healthy workers will decline an average of 26 percent. The decline is attributed to the spread of risk across a larger base broadened by

expanded coverage for younger individuals and workers under ACA reforms.

(The American Action Forum is a forward-looking policy institute dedicated to keeping America strong, free and prosperous. It seeks to promote common-sense, innovative, and solutions-based policies that will reform government, challenge out-dated assumptions, and create a smaller, smarter government that will serve its citizens better.)

Wall Street Journal March 22, 2013 By ANNA WILDE MATHEWS and LOUISE RADNOFSKY Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation's biggest firm projecting that rates could more than double for some consumers buying their own plans. The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate. Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law. The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human

Services says that the law will “make health-care coverage more affordable and accessible,” pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower. The gulf between the pricing talk from some insurers and the government projections suggests how complicated the law's effects will be. Carriers will be filing proposed prices with regulators over the next few months. Part of the murkiness stems from the role of government subsidies. Federal subsidies under the health law will help lower-income consumers defray costs, but they are generally not included in insurers' premium projections. Many consumers will be getting more generous plans because of new requirements in the law. The effects of the law will vary widely, and insurers and other analysts agree that some consumers and small businesses will likely see premiums go down. Starting next year, the law will block insurers from refusing to sell coverage or setting premiums based on people's health histories, and will reduce their ability to set rates based on age. That can raise coverage prices for younger, healthier consumers, while reining them in for older, sicker ones. The rules can also affect small businesses, which sometimes pay premiums tied to employees' health status and claims history. UnitedHealth Group, the nation's largest carrier, and other health insurers said premiums for some individuals and small businesses could rise. The law's 2014 effect on larger companies is likely to be more limited. Many of the big changes coming next year won't touch them as directly as individual consumers and small businesses, though some will have to grapple with the cost of covering more workers or paying a penalty. The possibility of higher premiums has become the latest focal point of the political tussle over the health law, which marks its third anniversary Saturday. Republican lawmakers have held hearings on the issue, and six

GOP members of the House Energy and Commerce committee wrote last week to more than a dozen insurers asking them to turn over internal analyses on the law's impact on premiums and costs. The insurance industry has also been talking publicly about big potential premium increases in lobbying for tweaks to the law. The individual market includes about 15 million people, and around 18% of the roughly 149 million with employer coverage were at small companies, according to 2011 figures from the Kaiser Family Foundation. The individual market is expected to grow to around 35 million people by 2016 as a result of the law. In a private presentation to brokers late last month, UnitedHealth Group Inc., UNH -1.25% the nation's largest carrier, said premiums for some consumers buying their own plans could go up as much as 116%, and small-business rates as much as 25% to 50%. The company said the estimates were driven i

n part by growing medical costs not directly tied to the law. It also cited the law's requirements that health status not affect rates and that plans include certain minimum benefits and limits to out-of-pocket charges, among other things. Jeff Alter, who leads UnitedHealth's employer and individual insurance business, said the numbers represented a “high-end scenario,” not an average. “There are some scenarios in which a member could see as much as a 116% increase or over,” he said, though others, such as some older consumers, could see decreases. He said the company dwelled on the possible increases because it was trying to prepare brokers to speak with clients facing big jumps. Other carriers have also projected steep rate increases during private meetings and conversations with brokers. Brokers say they are being told to prepare the marketplace for small-business and individual rate increases as carriers get ready to file specific rate proposals and plan designs with regulators. Insurers are “not being shy that premiums are going to increase in 2014,” and are urging brokers to “brace our clients,” said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, Fla. His firm has been hearing from carrier representatives that individual premiums in Florida could go up 35% to 50%, on average, and small-business rates around 30%, though it hopes to find strategies to blunt the impact. Aetna Inc., AET -0.82% in a presentation last fall to its national broker advisory council, suggested rates on individual plans not being grandfathered under the law could go up 55%, on average, and gave a figure of 29% for small business rates. Both numbers included 10 percentage points tied to medical-cost inflation, not the law. An Aetna spokesman said the numbers are “still generally in line with what we've been estimating,” and represented the average impact in a typical state. An official with Blue Cross & Blue Shield of North Carolina told a gathering of brokers last week that individual premiums could go up by as much as 40% to 50%, according to brokers who were present. A spokeswoman for the insurer said “we don't have final numbers” yet on premiums. There has long been debate, even among insurance experts, over how the law will affect premiums. Because the effect is likely to vary, different measurements can arrive at different conclusions. The CBO analysis cited by the administration determined that average premiums for consumers who buy their own coverage would be 14% to 20% lower because of the law—if the law didn't change the types of plans they purchased. But the CBO also suggested the law would lead to consumers buying more expensive plans, largely because it requires coverage to include certain benefits and limit charges such as deductibles. When this effect was taken into account, the average premiums would go up 10% to 13%, the agency said, though subsidies would ease the bite for most people. The agency also said small-business policies were likely to cost within a few percentage points of the amount they would have without the law. Health and Human Services officials say competition among insurers, as well as provisions to limit their financial risk from attracting high-cost consumers, will exert downward pressure on premiums, and point to the tax subsidies that will limit many consumers' costs. Subsidies will be available on a sliding scale for people with incomes of up to four times the federal poverty level—currently $45,960 for

a single person and $94,200 a year for a family of four. More than half of the 35 million people expected to be in the individual market by 2016 are likely to qualify for credits. People whose incomes are around the poverty level could see almost all of the cost of their insurance subsidized, while people at the upper end will get only a small discount toward their premiums.

Some Americans could see their insurance bills double next year as the health care overhaul law expands coverage to millions of people.

The nation's big health insurers say they expect premiums — or the cost for insurance coverage — to rise from 20 to 100 percent for millions of people due to changes that will occur when key provisions of the Affordable Care Act roll out in January 2014.

Mark Bertolini, CEO of Aetna Inc., one of the nation's largest insurers, calls the price hikes “premium rate shock.”

“We've done all the math, we've shared it with all the regulators, we've shared it with all the people in Washington that need to see it, and I think it's a big concern,” Bertolini said during the company's annual meeting with investors in December.

To be sure, there will be no across-the-board rate hikes for everyone, and there's no reliable national data on how many people could see increases. But the biggest price hikes are expected to hit a group that represents a relatively small slice of the insured population. That includes some of the roughly 14 million people who buy their own insurance as opposed to being covered under employer-sponsored plans, and to a lesser extent, some employees of smaller companies.

The price increases are a downside of President Barack Obama's health care law, which is expected to expand coverage to nearly 30 million uninsured people. The massive law calls for a number of changes that could cause premiums for people who don't have coverage through a big employer to rise next year — at a time when health care costs already are expected to grow by 5 percent or more:

— Changes to how insurers set premiums according to age and gender could cause some premiums to rise as much as 50 percent, according to America's Health Insurance Plans, or AHIP, an industry trade group that's funded by insurers.

— A new tax on premiums could raise prices as much as 2.3 percent in 2014 and more in subsequent years, according to a study commissioned by AHIP. Policyholders with plans that end in 2014 probably have already seen an impact from this.

— Requirements that insurance plans in many cases cover more health care or pay a greater share of a patient's bill than they do now also could add to premiums, depending on the extent of a person's current coverage, according AHIP.

The Obama administration says the law balances added costs in several ways, including tax credits that will bring down what many consumers will pay for insurance.

“The health care law will bring down costs and save money for young people and families,” said Erin Shields Britt, a spokeswoman for the Department of Health and Human Services. “It's misleading to look at one provision of the law alone. Taken together, the law will reduce costs.”

WHERE 'RATE SHOCK' MAY STRIKE

The impact of some cost hikes will be wide ranging. The new premium tax, for instance, will affect individual insurance, some employer-sponsored coverage and Medicare Advantage policies, which are privately-run versions of the government's Medicare program for the elderly and disabled.

Other price hikes will vary due to factors like a person's current coverage and age. Young people who currently have low-cost coverage may see some of the biggest hikes.

In many states, insurers charge a 60-year-old customer $5 in premiums for every $1 they collect from a 24-year-old. The logic behind that is that older people use health care more and generate more expensive claims than younger customers, so insurers need to collect more to help pay their bills.

But the overhaul will narrow that ratio to 3-to-1. That alone could cause the premium for a 24-year-old who pays $1,200 annually to jump to $1,800, according to AHIP. Meanwhile, the 60-year-old who currently pays $6,000 will see a 10 percent drop in price.

Gender also can be a factor in whether premiums go up or down. The law will prohibit insurers from setting different rates based on gender — something they currently do

because women generally use more health care. That means premiums for some men could rise, while they fall for women.

Prices also may change depending on a person's current coverage. Many policies on the individual market (coverage not sold through employers) exclude maternity coverage, but that will be considered an essential health benefit under the overhaul. That could mean higher prices for some.

Vikki Swanson, 49, of Newport Beach, Calif., resents that the added benefit may lead to higher costs for her. “I had a hysterectomy, I have no need for maternity coverage, but I have to now pay for it,” she said.

As a self-employed accountant and financial analyst, Swanson has paid for her insurance coverage on the individual market for about 13 years. She watched her monthly premium climb from around $136 in 2001 to more than $600 before she could find cheaper coverage. She's frustrated that the overhaul may add to her bill.

“I have to pay not only my own premium but I have to subsidize everybody else,” she said.

CUSHIONING THE BLOW

While insurers forecast instant premiums hikes starting next January, the overhaul also is expected to tame health care costs for many.

Starting next year, the law will require insurers to cover everyone who applies. That means health care costs could fall dramatically for people who have been unable to find coverage due to a chronic condition like diabetes or high blood pressure.

There also will be tax credits, or subsidies, given to people with incomes that fall within 400 percent of the federal poverty level. For 2013, 400 percent of the poverty level for all states except Alaska and Hawaii would be $94,200. These credits won't lower premiums, but they can ease the insurance bill depending on a person's income.

The credits should help the 20-something customers that insurers warn will see big premium hikes, said Linda Blumberg, an economist with the Health Policy Center of the Urban Institute, a nonpartisan policy research organization. She noted that people in that age range are more likely to be either working for an employer that doesn't offer coverage or earning low wages that would entitle them to a sizeable credit.

“While these folks are potentially facing some premium increases due to all these reforms, they also are the ones most likely to get the financial help from the exchanges,” she said.

There are other changes that will benefit young and poor people. Some may qualify for coverage under the state-federal Medicaid program for the poor and disabled, which will expand in many states next year.

Additionally, people under age 30 who face big premium hikes will be able to buy plans that charge low premiums and just provide coverage for big or catastrophic costs. Those plans also will be available to people required to pay more than 8 percent of their income for coverage.

Associated Press By TOM MURPHY— Mar. 13 12:50 PM EDT

Plus, people who are age 26 and under are eligible to receive coverage under a parent's plan, thanks to another overhaul provision that already started.

In addition to those changes, insurers will have to compete for business on the exchanges, which could restrain price hikes, said Larry Levitt, a private health insurance expert with the Kaiser Family Foundation, which analyzes health policy issues. He noted, for instance, that some are already creating narrow networks of low-cost providers to help keep costs in check.

“Plans are very focused on trying to get these premiums down,” he said.

But Robert Laszewski, an industry consultant and former insurance executive, said that theory assumes there is no competition in the marketplace now. He noted that a small company may get quotes from as many as 10 insurers competing for business when it tries to find coverage through a broker.

“I haven't had one person in the industry remark to me, 'Gosh, I wonder what the other guy's charging,'” he said. “They're worried that all this stuff is so expensive, they're not going to get the pricing right.”