Small businesses consider shifting sickest workers to exchanges

Some small businesses are considering shifting their sickest, most expensive-to-insure employees to health insurance exchanges. But that strategy could threaten the viability of the online marketplaces by inflating the amount of sick and costly consumers shopping for health plans, Bloomberg reported.

Now that insurers can't deny consumers coverage because they have pre-existing conditions, some small companies are wondering whether they can send their most costly-to-ensure employees to the public exchanges.

"A handful of our clients, mostly in the 100- to 1,000-employee self-insurance market, have independently inquired about this and sought out legal counsel on the question," Richard Twietmeyer, executive vice president in charge of employee benefits at insurance brokerage M3, told Bloomberg. "It's not something I'm suggesting."

One possible option would be for companies to offer incentives for workers to decline coverage through the job rather than force them out of the employer plan or penalize them for staying on it. John Barlament, an attorney with law firm Quarles & Brady in Milwaukee said he "wouldn't be shocked at all" if some employers try that strategy next year. "Once [the exchanges] really get rolling, I could definitely see this happening in 2015."

However, the practice of companies transferring only their sickest employees into exchanges could threaten the viability of the online marketplaces. Many experts believe exchange success hinges on premiums from young, healthy consumers to help cover the costs of older, sicker ones.

"I don't believe the architects of the ACA set out for this to happen," Twietmeyer said. "If employer groups have the opportunity to carve out high-cost claimants, that would accelerate the death spiral of the exchanges, because they won't be able to balance the risk."

To learn more:
- read the Bloomberg article

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