A new survey conducted by Kaiser Permanente and reported today in The Denver Business Journal finds that small businesses in Colorado indicate that they will be more likely to offer health insurance to their employees once the health benefits exchange is up and running in 2014. Currently, 37% of small businesses (50 or fewer employees) in Colorado offer group health insurance benefits to their employees. But the survey of 300 Colorado small business owners found that 59% of them would be likely to offer health insurance benefits in 2014 via the health benefits exchange.
According to the article in The Denver Business Journal, the survey told business owners about the exchange being an online marketplace where small businesses can “pool their buying power and buy lower-cost health insurance.” After being informed of these details, 59% of respondents said they would be likely to provide health insurance for their employees as of 2014.
Of course, we don’t know yet what the actual reality of the health benefits exchange will be. We’re still waiting to see what the Supreme Court rules regarding the ACA. But Colorado is committed to moving ahead with various aspects of healthcare reform – including the health benefits exchange – even if the ACA is partially or entirely struck down by the court.
When presented with a positive view of the exchange as a place where health insurance will be “lower-cost”, it’s not surprising that a lot more employers say they would be likely to offer health insurance to their employees. What remains to be seen however, is whether the exchange can deliver on that promise, especially if the individual mandate portion of the ACA gets struck down by the Supreme Court or overturned by legislative action in the future.
One of the main reasons the exchanges are expected to be able to deliver lower cost health insurance is the individual mandate. If insurers know that everyone – including healthy people who may currently be uninsured – will be obtaining health insurance, they will be able to price coverage at a lower point and still be able to cover the cost of claims, since that cost will be spread over a larger population. But if health insurance isn’t mandatory, it’s hard to see how the exchanges would be able to achieve a significant reduction in premiums, especially in states like Colorado that already have a competitive health insurance market.
It will be interesting to see how health insurance premiums in both the individual and small group market look in 2014 when the exchanges get underway, and then again in 2015. If we do see a significant reduction in the cost of small group health insurance via the exchanges, I have no doubt that plenty of small businesses will be eager to set up group plans for their employees – we already know that cost is the primary barrier, and that a lot of businesses would like to offer health insurance but simply cannot afford to do so. But I also wonder whether we might see trends in premium increases that are similar to what we have now, even within the exchange. In order to really get a handle on health insurance premiums, we have to find effective ways of controlling healthcare costs first. The ACA included numerous cost-control provisions, but it remains to be seen how effective they will be. The exchanges are a good way for people and businesses to be able to shop for health insurance and coordinate their coverage with their federal health insurance subsidies. But the exchanges cannot address the actual cost of healthcare, which continues to climb much faster than inflation.