Small businesses hit by rate increases of 20 percent or moreNews added by Benefits Pro on February 7, 2014

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By Allen Greenberg

One in four small businesses saw rate increases of 20 percent or more in renewing their health insurance plans last year, a figure sure to stoke criticism of the Patient Protection and Affordable Care Act.

That figure, uncovered by the National Small Business Association as a result of its latest survey, follows on the heels of a Congressional Budget Report this week that forecast that the total number of hours worked will fall about 1.5 percent to 2 percent from 2017 to 2024 as a result of the health-care overhaul.

The NSBA said it survey found that 91 percent of respondents reported increases in their health plan at their most recent health insurance renewal.

NSBA President Todd McCracken said the survey also found that one-third of respondents held off on hiring a new employee and more than half said they held off on salary increases for employees.

At the same time, the majority of employers continue to think offering health insurance is important to recruiting good employees, and many pay for more than half of the cost of their employees’ plans.

The average monthly per-employee cost of health insurance premiums for a small firm is $1,121, the NSBA said. That figure is considerably higher than the $590 per month seen in 2009, the organization said.

Premiums were expected to rise under PPACA.

Last year, a study by the Milliman consulting firm on behalf of Center Forward, a bipartisan organization, projected premiums on average could rise by 40 percent.

Individual premiums, on average, were expected to increase 25 percent to 40 percent due to PPACA, the firm said, while small-market group premiums were forecast to increase by 6 percent to 12 percent. At the same time, experts expect to see a slowdown in overall health care spending.

Consulting firm PricewaterhouseCoopers last summer projected that health care inflation in the U.S. would dip to 6.5 percent in 2014, a nice reprieve from the double-digit increases of the past.

Enrollment in Obamacare health plans for small businesses has gotten off to a slow start, leaving in doubt whether the program can attract enough customers to satisfy carriers.

In large part, that’s because of the government’s failure to complete the online exchange for small businesses, known as the Small Employer Health Options Program; in 36 states, there will be no website offering ready information on the plans until November.
The NSBA found good news in its survey for health care brokers.

Three-fourths of small firms reported they plan to purchase insurance through their existing broker in the coming year and fewer than one in 10 plan to purchase health insurance through the SHOP exchange.

On the other hand, to deal with these rising costs, 34 percent of the respondents said they were holding off on hiring a new employee while 12 percent reported they had to lay off an employee. Also, 15 percent reported they plan to drop coverage in the coming year — up from just 2 percent who reported dropping coverage in the last year.

The 2014 Small Business Health Care Survey was conducted online Nov. 20-Dec. 4, 2013 among more than 780 small-business owners.

Click here to view the survey.

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