Obamacare to Raise Premiums for 65 Percent of Small Businesses

Franchise Your Business

Schedule a FREE one-on-one session with one of our Franchise Advisors today and we’ll help you start building your franchise organization.
Former Editorial Director at Entrepreneur Media
2 min read

The government says that roughly two-thirds of small businesses in America -- and their employees -- will see an increase in health-insurance premiums under Obamacare.

A report from the Centers for Medicare and Medicaid Services looked at the new rules facing insurers under the Affordable Care Act, namely the inability to charge premiums based on factors like the health of their employees. Small businesses have always seen a high variability in premiums because of worker health. Since they don't have many employees, just one worker who is ill can raise premiums for the whole organization.

However, most small businesses employ young, healthy workers -- people who wouldn't otherwise be charged high premiums for insurance. Under Obamacare, however, the good health of employees will not be a factor in setting rates, so the majority of small businesses will see premiums go up. The government estimates that 65 percent of small businesses will see rates rise.

Related: Obamacare Mandate for Many Businesses Pushed Back a Year

What's more, since most small businesses make their workers contribute to their own health coverage in some way, as many as 11 million individuals could see their own premiums rise, too.

It is unclear how much the rates will go up. The report makes no mention of the magnitude of any increases, either for small businesses or for their employees. However, the White House has consistently argued that Obamacare would lower rates for small businesses by 4 percent, not raise it for the vast majority of small companies.

The Centers for Medicare and Medicaid Services report notes the numbers may not pan out, though -- primarily because some companies may decide to drop health insurance altogether. That would force the employees into individual health exchanges. "There is a rather large degree of uncertainty associated with this estimate," the report notes.

Related: How Both Parties Were Wrong About Obamacare and Jobs

 

More from Entrepreneur
Our Franchise Advisors will guide you through the entire franchising process, for FREE!
  1. Book a one-on-one session with a Franchise Advisor
  2. Take a survey about your needs & goals
  3. Find your ideal franchise
  4. Learn about that franchise
  5. Meet the franchisor
  6. Receive the best business resources
Save on an annual Entrepreneur Insider membership through 5/8/21. For just $49/yr $39/yr, you’ll enjoy exclusive access to:
  • Premium articles, videos, and webinars
  • An ad-free experience
  • A weekly newsletter
  • Bonus: A FREE 1-year Entrepreneur magazine subscription delivered directly to you
Try a risk-free trial of Entrepreneur’s BIZ PLANNING PLUS powered by LivePlan for 60 days:
  • Get step-by-step guidance for writing your plan
  • Gain inspiration from 500+ sample plans
  • Utilize business and legal templates
  • And much more

Latest on Entrepreneur