Small Business Health Insurance Rates Rise Again
The Connecticut Insurance Department issued final rulings on health insurance rate filings for the individual and small group markets Sept. 8.
The final rate rulings will affect roughly 188,000 people covered in both markets.
In the individual market, the average requested increase was reduced by 24% (from the requested 12.4%), resulting in an average increase of 9.4%.
In the small group market, which covers employers with 50 or fewer employees, the average rate request increase was reduced by 50% (from a requested 14.8%), resulting in an average increase of 7.4%
The department cited rising healthcare costs, deteriorating experience, Medicaid unwinding, and two new health benefit mandate bills passed last session that warranted the steep increases.
Last year, the department approved an average increase of 12.9% for the individual market and 7.9% for the small group market.
The continued deterioration of the small group market poses great concern for small employers and policymakers.
Since 2018, the small group market has shed more than 150,000 enrolled lives since 2018. In 2018, the small group market enrolled roughly 235,000, people compared to under 75,000 today.
Additionally, the state-run exchange’s Small Business Health Options Program continues to see near non-existent enrollment.
Access Health CT raised assessment rates on individual and small business premiums by 12% earlier this year to offset declining revenues.
Given the ever growing number of state mandated benefits, taxes, assessments, and fees imposed on fully insured plans, small employers continue to migrate to self-funded products to gain more control over their health insurance offerings.
Self-funded plans are exempt from most state regulation under ERISA.
State lawmakers this year failed to act on legislation providing small businesses and their employees access to more affordable, high quality health options, despite broad bipartisan support.
According to the Kaiser Family Foundation’s 2022 Employer Health Benefits Survey, 38% percent of small firms offering health benefits reported that they have a level-funded plan, similar to the percentage in 2021 but much higher than in preceding years.
Level-funded arrangements allow a small employer to pay a consistent monthly premium that mirrors the same fixed costs as a traditional fully insured plan.
It traditionally contains a stop-loss and a predetermined claims fund amount to allow the opportunity for a refund.
The rapid decrease in market participation and the resulting instability of premiums also contributed to a major insurance carrier leaving the small group market altogether last year.
Roughly 20,000 people were covered by the carrier in the small group market last year.
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