Analysts at the Congressional Budget Office think members of Congress will need to know a lot about small employers’ health benefits this fall.
The CBO posted a comprehensive guide to the small-employer health benefit market Tuesday.
The agency’s analysts looked at options such as traditional self-insured health plans; association health plans; and ICHRA plans.
High costs and other challenges keep many small employers from offering health benefits, and “as a result, only 36% of small business workers were enrolled in a plan offered by their own employer,” the analysts said.
About 20% of the owners of the small businesses are uninsured, the analysts added.
The analysts warned policymakers efforts to cut the cost of coverage for small employers could lead to tough choices.
“Making more affordable options available to some businesses may raise the cost of coverage for others, or it may lead to the introduction of plans that cover a very limited set of services or that have inadequate provider networks,” the analysts said. “Some people enrolled in plans that provide fewer benefits or that have caps on covered spending may find themselves faced with high out-of-pocket costs.”
What it means: The CBO analysts expect their readers to be having complicated conversations about AHPs, ICHRA plans and self-insured plans in the next few months.
The Congressional Budget Office: The CBO is an arm of Congress that helps lawmakers and their aides understand issues related to federal spending.
The backdrop: Congressional leaders have not yet scheduled major health policy hearings or unveiled major new health policy proposals.
But existing proposals, like the Employer Health Plan Flexibility Act bill, are out there, and House and Senate committees have given health transparency packages unanimous support.
The Congressional Research Service recently posted an infographic that gave members of Congress and their aides a snapshot of how the controversial No Surprises Act health plan claim dispute resolution system works.
Many health benefits marketers would like to see Congress update the rules for health savings accounts, individual coverage health reimbursement arrangements and other types of health accounts.
Some policy analysts on the left have renewed calls for the country to move to a government-run health finance system that would replace both individual major medical insurance and employer-sponsored health plans.
The report: The CBO analysts started with health plan enrollment data that extended only up until 2024.
Between 2014 and 2024, the number of people with some kind of health coverage provided by a small business increased to 18.6 million, from 16.9 million, the analysts said.
Fully insured small-group health plans are subject to the Affordable Care Act “community-rated” pricing rules, or bans on use of enrollee health status in setting coverage prices.
For employers with small self-insured plans or some other types of coverage, such as association health plan coverage, the cost of coverage is “experience-rated,” or based on how much the participants actually spend on care.
The percentage of small-employer plan participants in the community-rated plans fell to 50% between 2014 and 2024, from 60% at the start of the period.
The percentage of participants in experience-rated plans increased to 46%, from 18%.
Association health plans: The CBO analysts pointed out that many of the people in small self-insured health plans were in level-funded plans, or plans that use stop-loss insurance and other mechanisms to hold an employer’s monthly costs relatively steady throughout the year.
Small employers with relatively healthy employees can also shift to experience-rated plans by joining association health plan programs, or programs that buy coverage for multiple small employers.
Court fights led to dramatic changes in AHP rules between 2014 and 2018, but AHPs have continued to thrive in some states, in spite of the uncertainty, according to the CBO analysts.
The analysts found that AHPs had 1.3 million enrollees in 2024, up from 650,000 in 2014.
“Such plans have gained popularity in some states as an experience-rated alternative for businesses that might otherwise have considered setting up a level-funded plan,” the analysts said.