Healthier Employees May Lead to Bigger Increases Under Obamacare





Having younger, healthier employees may no longer mean lower health insurance increases for small businesses after next year. If you’re wondering how that can be, thank Obamacare.

According to brokers and other experts, the Affordable Care Act, which goes into effect in January, will have some unanticipated impacts, especially on small group premium plans. These are the kinds of plans often bought by employers with between 50 and 100 employees or less.

Why Healthier Employees May Lead to Increases Under Obamacare

Under the Act, insurance companies can no longer consider the health of employees (except for tobacco use) or the risk in their particular industry when setting insurance premiums, the Wall Street Journal reported last week. And insurance companies must consider age to a much lesser degree when setting those premiums, the Act says.

So what does this mean?

It could signal good news for businesses that employ less healthy or older workers or those in a higher risk industry–think industrial manufacturing.

But for businesses with younger and potentially healthier employees — many tech businesses, for example — or for those in lower risk white collar industries, the new rules may mean trouble.

Costs Spread Around

The Affordable Care Act will have the overall effect of spreading out insurance costs among small businesses. Those companies with a fairly even distribution of employees based on age and health may see little change in their premiums. Those businesses with a larger number of older, less healthy employees may see a lower increase in premiums than they are used to next year.

For instance, a Connecticut hinge manufacturer employing 16 people with an average age in their early 50’s could see premiums increase by just 10 percent next year, the Wall Street Journal reported. That’s compared with 18 percent last year, so a fairly significant change. Compare that to small businesses with younger, healthier employees that will almost certainly see more cost.

How much more?

Well, another Connecticut firm, a 23 employee computer business, anticipates a 25 to 45 percent increase in insurance premiums next year after historical increases of between 13 and 17 percent.

Is the Affordable Healthcare Act going to affect your company’s insurance premiums in 2014? What are you anticipating?

US Healthcare Photo via Shutterstock

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Joshua Sophy


Joshua Sophy Joshua Sophy is the Assistant Editor for Small Business Trends and the Head of Content Partnerships. A journalist with 20 years of experience in traditional and online media, Joshua got his start in the rough and tumble newspaper business of Pennsylvania's coal region. He is a member of the Society of Professional Journalists and was a beat reporter covering daily news. He eventually founded his own local newspaper, the Pottsville Free Press, covering his hometown. Joshua supervises the day-to-day operations of Small Business Trends' busy editorial department including the editorial calendar and outgoing assignments.

14 Reactions

  1. Joel Wischkaemper

    I fully agree.. lets tie the old people up and put them on the curb just before a blizzard hits. Zoom.. lower prices and all those efforts to achieve some sort of security will be assured in the grave.
    Americans lost some 7 trillion dollars in the last economic collapse. Ole’ George Bush was out there telling us to invest in the Stock Market, and housing, and boom.. the crash wiped out more retirement efforts than a nuclear weapon on a retirement center.. speaking of which.. that is another good idea. Not. In the economic collapse before that, Americans lost a whole lot of money. Along comes Enron, and while the folks in Washington took care of happy hourS in the topless clubS of DC, the funds for retirement took a hit that wasn’t too far off the hit from the last go around. On, and on. More and more. OOPS.. I should be respectful of Congress.

  2. Joel Wischkaemper

    One last point and related specifically to our current fiasco in DC. Look carefully at the congress folks in WDC and look at their recommendations. They are NOT experts in investing for the future, NOT demographic experts, NOT weapons experts, NOT social engineers, NOT ‘proven’ lawyers, NOT ‘proven’ law enforcement, and in fact, well.. go look and figure it out for yourself. Further, they like those job benefits, and when issues come up, they go to their cash cows for advice.. the lobbyist’s.

    Obama care is a farce with one (1) purpose in many lives. It will finally force this country to find a decent health care plan paid for by the people who need such a plan. Medicare is headed for the pits, but the fact is, someone needed to get in there and make Medicare grow wings and fly. If we can get rid of the lobby groups.. some one will do exactly that: we will have a decent medical plan for Americans that equals all the other countries with excellent Health Care Plans.

  3. Oh, and the SKY is FALLING… Give it up when obamacare is up in going the right wing lies will be seen…

  4. A couple things need to be considered. First of all, if all companies provide insurance, then there is no competitive disadvantage in having group insurance. So, even if costs rise, the increase will also impact competitors. It is a wash. Secondly, if almost all American have health insurance, over time, there ought to be a healthier nation and that is good for business, unless you are in the health care field.

    • Anita Campbell

      Jimmy, You’re assuming that all companies are large companies and will simply “absorb” the cost of health insurance. Not so for small businesses.

      – Anita

      • Anita, I’m not assuming any such thing. I believe any increased costs will be born equally and that means companies can pass the cost along in their pricing.

  5. Nice little bit of speculation but based on the experience with Romney Care here in Massachusetts a huge increase in premiums will occur almost immediately. After all, the huge run up in health costs in the past 50 years isn’t driven by worse public health or expensive technology. It is driven by a system that conceals prices and prevents competition. Don’t get me wrong, I am not criticising greed. Greed is the basis of our economic system, but greed unrestrained by competition is a very bad thing and insurance destroys competition.

  6. Not enough attention is being given to the highly critical problem w/ those age 50+ and long-term unemployment. I’ve seen the valuable, highly experienced people showing up at (church-based) job networking events around the country and it’s clear what’s going on. I now have friends and family who have considered taking their own lives because they seemingly have no future!

  7. WoW Just take a page from every other free health care country. First make the doctors take a pay cut. In Canada, general practitioners make over 350,000 a year. and up to millions more if they are a specialist. So I don’t think U.S. doctors need to make much more than that in which they certainly already do.

    Next give those EVIL health insurance companies the boot.

    I’m sorry but I can get unlimited doctor and hospital visits and cheaper medicine than anyone in the U.S. And there are hospitals all over the U.s. with 8 hour wait times… I have american friends who are insured and they still cant afford to pay the difference on their medical bills.

    Ok us as Canadians do get taxed a little more (if you make $16,000 or less you live income tax free) but taxes don’t make us bankrupt, in fact our minimum wage is much higher than any state.

    America, Guns kill people and free health care saves them. Quit treating both like a commodity and pick up a book to get educated on the matter!

  8. I scour the internet and newspapers for articles in which to educate my children, ages 11-14, about reading critically. Your article regarding ObamaCare was a perfect quick and easy lesson in “yellow” persuasive journalism. The boys easily picked out how your article was based on practically no facts and used “may” and “could” throughout your essay. Some of the headlines for your future articles?
    “Flossing May Cause Cancer”
    “Healthy Diet Could Lead to Bankruptcy”
    “Reading May Not Be Good For Your Brain”
    “On-line Bloggers May Be Under-educated Drop-outs”

  9. This is not surprising. The PPACA is not going to do anything to keep costs down for small companies, and, as you point out, it will likely lead to huge increases for most if not all. There are few alternatives, but I’m a part of one that I really like (thehealth.coop).

  10. I see a rise in businesses with less than 50 employees and many more part-timers.

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