Few small employers are likely to avoid regulation under the 2010 federal health care reform law by self-insuring or by keeping old plans, according to a RAND Corp. study published Feb. 8.
Businesses that maintain “grandfathered” plans or that self-insure are exempt from many regulations of the Patient Protection and Affordable Care Act. But those regulatory exemptions will have only a minor impact on cost or coverage in the small group market because relatively few small businesses are likely to take advantage of them, RAND said in the study, which it said was “supported” by a contract from the Department of Labor.
The study, “Small Firms' Actions in Two Areas, And Exchange Premium and Enrollment Impact
,” focused on PPACA's “rating” requirement. In 2014, insurers may vary premiums for companies with 100 or fewer workers based only on enrollees' age, geographic region, family size or tobacco use and not based on participants' health plan.
The study examined how the grandfather provision for plans that existed when PPACA was signed into law March 23, 2010, and exemptions for self-insured plans may affect coverage and premium costs for policies sold through insurance exchange markets set up for small employers. Exchanges for small employers and for individuals will be set up in all states in 2014 under PPACA.
Based on estimates, 88 percent of small companies will have lost their grandfathered status by 2016 because they will find it “infeasible to continue to offer current coverage without making changes,” RAND projected. Congressional Republicans and critics of PPACA have cited the agencies' impact estimates as evidence that President Obama broke his pledge to allow people to keep health plans they like.