An actuarial analysis in a health care reform report from the Shumlin administration shows members in the “association” market — such as a chamber of commerce — could see an increase in health insurance premiums of 18.4 percent.
This projected increase in insurance rates caused a stir when Emerson Lynn, editor and co-publisher of the St. Albans Messenger, wrote an editorial that later appeared on the conservative website Vermont Tiger.
The 68-page report released in January to the legislative committees on health care and finance lays out the administration’s plan for the federally mandated exchange. Part of this plan involves actuarial analysis where the administration took 2010 claims data and calculated different scenarios to determine the effects merging insurance markets will have on insurance premium costs.
Lynn pointed to the number as a crushing increase in premiums for small businesses with 50 or fewer employees who must purchase health insurance through the exchange under the administration’s current proposal.
“If the state wants to ruin any chance of making progress toward affordable health care reform, this is a wonderful opening act,” Lynn wrote.
Lynn’s op-ed sparked a response from Steve Kimbell, commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration. Lynn fired back again.
The issue is one of many that appears to have become a part of the health care reform debate playing out on the Internet.
Just what the 18 or so percent increase means isn’t clear. That’s because the hike applies to one class of businesses — those that purchase insurance through an association, like the Vermont Chamber of Commerce.
Small businesses in the small group market that do not purchase insurance through an association would see premium decreases of 8.4 percent, according to the administration’s analysis.
But businesses with 50 or fewer employees can opt out of the insurance benefits game altogether. Their employees can then purchase, as individuals in the insurance market, federally subsidized health care coverage.
Lynn said the catch is if employers raise wages for employees, the federal subsidies drop.
Steve Kimbell, commissioner of the Department of Banking, Insurance, Securities and Health Care Administration, said the exchange will allow many employees of small businesses to access federal tax subsidies and give small employers the option of whether to offer insurance.
Kimbell said smaller businesses can opt out of offering insurance plans without a penalty under the federal law. Larger employers have to pay a penalty if they fail to offer insurance.
According to Robin Lunge, director of heath care reform for the Shumlin administration, the actuarial analysis is a snapshot of what might happen in 2014 using 2010 data.
It’s slightly confusing comparing the “association” and “small group” markets, she said. Under the federal health care reform law, both of these markets will be treated the same for purposes of the health benefits exchange. The exchange treats people who get insurance through an association the same as individuals or groups who are not part of an association.
Currently, associations are able to base premiums on their own unique insurance pool. This allows some to keep premiums down for their group by insuring businesses with healthy employees and avoiding those with unhealthy employees, according to Lunge.
In the exchange, people who were insured by associations will move into the larger insurance pool with individuals and small businesses. Their predicted increase in premiums is a result of the blending of these markets.
The report states: “Since the ACA requires each insurer to merge all its small groups into a single rating pool, groups within associations today may experience significant rate changes when these groups are rated together with other elements of the small group market.”
Those associations that have attracted the healthiest people will likely see the greatest premium increases, according to the report. On the other hand, Lunge points out, small groups that have purchased insurance on their own will see rate decreases.
“It’s a little misleading to say there’s an increase for all businesses,” Lunge said.
Lynn declined to be interviewed on the record for this story. In his editorial, he wrote: “It doesn’t feel much like health care reform when a sizable part of the Vermont economy is being asked to pay 18.4 percent more.”
Eliminating the “loophole” for associations, Kimbell said, will level the playing field for associations and their employees. Individuals and small groups who are not affiliated with an association generally have higher premiums.
“This one-time change fixes a problem that has existed in our system for 20 years,” Kimbell said.
Editor’s note: A write-thru of this story was posted at 5:53 a.m. Feb. 9.
