Sadie Tuescher is the founder and owner of Wisconsin Health Insurance Advocate LLC, a Wauwatosa-based insurance brokerage that provides no-cost enrollment assistance to individuals, families and small groups.
Small group health care coverage, the market for organizations with less than 50 employees, is experiencing a high level of turbulence. This isn’t an accident, but a clear result of intentional public policy; one our state could correct.
If you’re a small business owner, a nonprofit or other firm, you’ve doubtlessly worried about the cost of offering health coverage. If you offer it, it’s likely a sizeable chunk of your budget, and it may not offer as much protection from medical bills as it once did. Less than half of small businesses offer health coverage—down from two-thirds of small firms in 2000. Yet, you know that offering health coverage is a good decision; it makes employees want to work for you, it offers vital protection, and it’s a point of pride to be able to offer it despite all that is going on.
But, maybe you can’t help but feel stuck—like the market for healthcare has been run off course. You may be right. Wisconsin is one of the most expensive states for healthcare, but remedies being proposed do not offer hope for small groups. In fact, the future is concerning.
Governor Scott Walker’s plan to address premiums—known as “reinsurance” and promising $200 million in public dollars to private insurers—is not expected to impact the small group market at all. Donald Trump’s proposal of “association” health plans leave many experts worried about a return to cut-rate coverage that may leave consumers holding the bag. It’s not a comforting thought.
Troublesome ‘Grandmothered’ Plans
One recent action taken here that likely will influence the cost of small group health coverage is the decision by Wisconsin Insurance Commissioner Ted Nickel to allow a type of health plan that isn’t fully compliant with the Affordable Care Act (ACA). These “transitional” plans, also known as “grandmothered” plans, were continued until 2019 by the commissioner’s office. They allow insurers to sell plans that don’t have to follow the rules that others have to under the ACA, such as not discriminating against people with pre-existing conditions or even covering all the same services that ACA plans would.
While you may have heard the term “grandfathered” plans, which refers to plans originally purchased before the ACA and held on to, grandmothered plans could be purchased today. And it’s not a small decision. According to the Wisconsin Insurance Commissioner’s own data, more small business employees and employers are covered by these grandmothered plans (116,600) than by ACA-compliant plans (108,700).
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What’s concerning is that healthy people are being pulled away as the market for small business health coverage is split right in half. Healthy, often younger, workers may opt for the grandmothered plans with lower premiums and skimpier coverage; leaving older, often less healthy workers to rely on the ACA-compliant market option. But we don’t stay young and healthy forever. This man-made health insurance fissure makes us all pay more, both immediately and in the future. And research is clear: Allowing the continued existence of grandmothered plans increases the cost of health insurance for those not on them.
This isn’t how health insurance should work. Cutting our community into different “risk pools” hurts us all. States like Minnesota don’t allow the sale of grandmothered plans, and, between that and other state policy decisions, it’s not surprising that in places like Minneapolis premiums are hundreds of dollars less per month than in Milwaukee.
Be careful this enrollment season and remember that, while you may have more choices, you could end up picking a plan that isn’t what you first thought it was.
Sadie Tuescher is the founder and owner of Wisconsin Health Insurance Advocate LLC, a Wauwatosa-based insurance brokerage that provides no-cost enrollment assistance to individuals, families and small groups.
