Obamacare Costs Still A Mystery Days Before Key Provision Takes Effect

The scheduled date for enrollment to begin on Obamacare exchanges is just days away, but the only thing certain about how much the new health law is going to cost Michigan's small businesses is that no one can say for sure.

Many of Michigan's small businesses are beginning to check with their insurance companies to get an idea of how much they'll be paying for health insurance next year. There has been talk of some small businesses facing rate increases of from 38 percent to 42 percent. However, a view of the overall situation is elusive.

The law is to take effect Oct. 1.

The uncertainty has many businesses wondering what will happen to their costs for health care coverage.

There are a lot of moving pieces. It depends on where things land," said Scott Lyon, vice president of small business services, with the Small Business Association of Michigan. "What we have is some anecdotal information. We're hearing from businesses that are looking at big cost increases. But it's kind of human nature to hear about those. Some of the businesses with more modest increases are less likely to call us.

“Right now, we really can't say what the demographics will be overall,” Lyon continued. “All we can say is that, from what we're hearing, there seems to be more increases.”

Charles Owens, state director of the National Federation of Independent Business-Michigan, agreed that at this point, there is no way to accurately track how Obamacare is going to affect Michigan's small business health care costs. 

“Here's the challenge, all we really have so far is anecdotal information that we're hearing about as people renew,” Owens said. “We can't say what's happening overall because there's no way to get the overall numbers. But I think it is a pretty safe assumption that most small businesses are likely to see increases.

“I will also say this, it is our expectation that in the year to come there's going to be an awful lot of confusion,” Owens added.

Robert Dotson Jr., of the Saginaw Bay Underwriters insurance agency, said that based on what his company has been observing it looks like health care costs will be going up for about three of every four small businesses.

“Costs will vary from company to company,” Dotson said. “There could be some companies that will actually see cost reductions. But we believe it is more likely that about 75 percent are going to get increases.”

Caleb Buhs, public information officer for the Michigan Department of Insurance and Financial Services (DIFS) said his department doesn’t yet have an overview of the situation.

“Because of the major changes in the health insurance landscape taking place in 2014 with the implementation of the ACA (Affordable Care Act), DIFS does not have an estimate on what effect it will have on businesses next year,” Buhs said. “There are ever-changing regulations from the federal government, such as the delay of the small-business mandate, that also make it difficult to predict the overall impact.”

Health exchanges are suppose to provide individuals and businesses a menu of what policies will cost.  

“The exchange is what people are supposed to be able to access to select insurance coverage,” Lyon said. “But there's a good deal of doubt about whether the exchanges — including Michigan's — will actually be opening on Oct. 1.

“Michigan's exchange will be operated by the federal government and there's a lot of skepticism that enough of the required information will be known to open the exchange on time,” Lyon continued. “It would make no sense to open the exchange if the prices weren't available.”

Bob Sidney, who also is with the Saginaw Bay Underwriters, said having health insurance policies terminated in 2013, then getting new ones in 2014, is an option being considered for many small businesses.

“To comply with Obamacare, [insurance] carriers can terminate policies at the end of the year and then offer new ones next year that have been adjusted to the new requirements,” Sidney said. “Another way they can do it is to keep the policy intact and have it adjusted to comply with Obamacare. Making the adjustments in this way is called mapping.”

Sidney also said that under Obamacare insurance agents will have a lot less flexibility to make changes that could save their customers money. 

Regardless of what happens with plan costs, Obamacare includes taxes and fees that will be automatically pushing up health insurance costs for all businesses, Lyon said.

"Regardless of whether current policies are renewed or new ones are written these taxes and fees are going to be applied," he said.

Dotson concurred, and added that the new taxes and fees aren't cheap.

“Generally speaking, those are going to create increases of between 4 and 6 percent,” Dotson said. “That's a cost increase that will have nothing to do with the benefits.

“There seems to be a perception among some that Obamacare means reduced prices or even free health care,” Dotson continued. “For some it may be free, but for everyday blue collar people that probably won't be what happens. Based on what we've seen to date, I think that a lot people are going to be surprised — and for many — it isn't going to be a happy surprise.”