Are insurers quietly dropping small businesses?

Decline particularly prevalent among Blue Cross Blue Shield plans

As insurers reap financial benefits from the Affordable Care Act, many appear to be raising rates for small employers to the point that they can no longer afford to provide benefits, former industry executive Wendell Potter wrote in a commentary for the Center for Public Integrity.

Jeff Alter, chief executive of UnitedHealth's employer and individual business, said that as many as 65 percent of all small businesses offered insurance to their employees in the 1990s. Now, no more than 55 percent of small companies provide coverage.

The decline in the small group market is particularly prevalent among Blue Cross Blue Shield plans, which saw a 6 percent decrease in small businesses.

Blue Cross Blue Shield of Tennessee, for example, saw a large decline in its small group business. Between the first quarter of 2008 and the third quarter of 2014, small business enrollment decreased almost 20 percent, while the percentage of premium revenue the insurer spent on claims in its small business market fell from 82 percent in 2008 to 74 percent last year.

Based on these numbers, Citigroup financial analyst Carl McDonald said it's possible that "small group dumping has been more pronounced at the Blues than has been the case at most publicly traded plans," according to the CPI commentary.

Part of the problem may be the trouble associated with using the Small Business Health Options program (SHOP), the health insurance exchange geared for small businesses that hasn't worked as planned and has failed to gain traction, FierceHealthPayer previously reported.

To learn more:
- read the Center for Public Integrity article

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