title: Small firm self-insurance under the Affordable Care Act.
abstract: The Affordable Care Act changes the small-group insurance market substan­tially beginning in 2014, but most changes do not apply to self-insured plans. This exemp­tion provides an opening for small employers with healthier workers to avoid broader sharing of health care risk, isolating higher-cost groups in the fully insured market. Private stop-loss or reinsurance plans can mediate the risk of self-insurance for small employ­ers, facilitating the decision to self-insure. We simulate small-employer coverage decisions under the law and find that low-risk stop-loss policies lead to higher premiums in the fully insured small-group market. Average single premiums would be up to 25 percent higher, if stop-loss insurance with no additional risk to employers than fully insuring is allowed--an option available in most states absent further government action. Regulation of stop-loss at the federal or state level can, however, prevent such adverse selection and increase stabil­ity in small-group insurance coverage.
authors.affiliation: Health Policy Center, The Urban Institute, USA. mbuettgens@urban.org
authors.forename: Matthew
authors.initials: M
authors.lastname: Buettgens
authors.forename: Linda J
authors.initials: LJ
authors.lastname: Blumberg
mesh_terms: D000206:Actuarial Analysis; D006264:Health Benefit Plans, Employee / Q000191:economics* / Q000331:legislation & jurisprudence; D006801:Humans; D019458:Insurance Coverage / Q000191:economics* / Q000331:legislation & jurisprudence; D058991:Patient Protection and Affordable Care Act; D012306:Risk; D018570:Risk Assessment; D058012:Small Business / Q000191:economics* / Q000331:legislation & jurisprudence; D014481:United States