Small businesses buying health coverage for their employees through a new state insurance marketplace could pay anywhere from 5 percent less to 15 percent more in premiums next year under rates Maryland regulators approved Tuesday.
The Maryland Insurance Administration approved rates that were as much as 17 percent lower and up to 9 percent higher than what 13 carriers, many of them multiple subsidiaries of the same owner, had proposed for sale on Maryland Health Connection. The insurance exchange is set to open Jan. 1 for businesses to shop for insurance coverage that begins March 1.
Overall, the year-over-year changes in rates are on par with a typical year, state insurance Commissioner Therese Goldsmith said. The broad range of approved insurance premiums includes some plans that are among the cheapest in the country and others in the middle of the pack nationwide.
That is despite the fact that insurers were required to add several new types of coverage to plans because of a federal health care reform measure, said Rebecca Pearce, Maryland Health Connection's executive director.
"I feel like we have a broad choice of options and the fact that the rates are among the lowest in the country, I'm happy we can announce that as well," Pearce said.
For example, a 40-year-old nonsmoker enrolled in a plan that pays about 70 percent of the cost of covered services will pay between $208 and $435 a month, depending on the plan his or her employer purchased. In states like California, Connecticut, New York, Oregon, Rhode Island and Vermont, that person would pay from $250 to $500, or as much as $700 in Colorado.
In many cases, employers pay a share of those premium costs as a benefit to workers.
Ellen Valentino, Maryland director for the National Federation of Independent Business, said the reduction in rates for some plans is good news for small-business owners, but a 14 percent premium increase for others is "significant."
"Higher costs have an effect on behavior and choices small-business owners have to make," Valentino said. Her organization plans to watch whether businesses choose to buy through the exchange and which plans they purchase, actions that could affect future insurance rates and the health of the exchange, she said.
Businesses with two to 50 employees are eligible to buy insurance on the small-business exchange, known under the federal health reform law as the Small Business Health Insurance Options Program, or SHOP. Small employers with 25 employees or fewer and average annual wages of less than $50,000 can receive tax credits for buying coverage for their employees through the exchange.
Under the federal reform law, businesses with more than 50 full-time workers will be required to offer health coverage to employees or pay a penalty if any of the employees receive a federal tax credit for obtaining coverage as individuals. The requirement had been set to be enacted Jan. 1 but the U.S. Treasury Department has said it would delay that by a year because of complaints from businesses.
Carriers approved to sell plans on Maryland's small-business exchange include two affiliates of Aetna, as well as two affiliates of Coventry Health, which Aetna acquired this spring; two affiliates of CareFirst BlueCross BlueShield; Evergreen Health Cooperative; Group Hospitalization and Medical Services Inc.; Kaiser Foundation Health Plan of the Mid-Atlantic; MAMSI Life and Health Insurance Co.; Optimum Choice Inc.; and two affiliates of UnitedHealthcare.
Aetna announced last month that it would not sell insurance to individuals through the Maryland Health Connection. The insurer is still considering where it plans to participate in exchanges, but has said it intends to sell on the small-business exchange in Maryland, spokesman Walt Cherniak said.
The insurance administration in July approved rates as much as 25 percent higher for Marylanders who buy health insurance as individuals, rather than through their employers, on the Maryland Health Connection.
The rates were lower than those insurers had proposed, by as much as 29 percent and as little as 1 percent. A 6 percent to 7 percent annual premium increase is considered typical across the country. Insurers said they were seeking the increases to cover the uncertainty of new costs associated with health care reform.
But the market of businesses shopping for employee coverage, known as the small-group market, is considered significantly less risky for insurers in Maryland because it has existed and remained stable for years, said Dr. Peter Beilenson, former Howard County health commissioner and CEO of Evergreen. That helped keep the insurance administration's adjustments to insurers' proposed rates for small businesses more "modest" relative to the major cuts made to individual insurance rates.