Federal and state officials and consumer advocates have grown worried that companies with relatively young, healthy employees may opt out of the regular health insurance market to avoid the minimum coverage standards in President Obama’s sweeping law, a move that could drive up costs for workers at other companies.
The new law reduces the risks of self-insurance. Previously, self-insured companies would have struggled to switch to the insured market if employees developed costly illnesses. Under the law, companies can switch with no penalty, as insurers generally “must accept every employer and individual” who applies for coverage.
The Obama administration is investigating the use of stop-loss insurance by employers with healthier employees, and officials said they were considering regulations to discourage small and midsize employers from using such arrangements to circumvent the new health care law. “This practice, if widespread, could worsen the risk pool and increase premiums in the fully insured small group market,” the administration said in a notice in the Federal Register.
Enrollment around the country has been lower than expected, partly because some people could not afford the premiums. But individual cases have turned out to be costlier than originally projected.