Medical Loss Ratio (MLR) numbers with a shrinking number of pools will have little affect.
There are some groups that look at this whole set of communications over the past two years and ask ... "What is all of this about?" Good question. Most groups have received refund amounts that are so small, the cost to distribute the refund in any meaningful way far outweighs any benefit to the plan participants. So, it appears that the real "marketplace" has indeed kept the excess margins that the carriers were frequently accused of making as just a "straw man".
Rates are going up ... Suuuhprize!
Often we remind folks that if a free car wash and oil change was added as a monthly benefit to auto insurance, as a mandated requirement, auto insurance would rise and so would the price of those services in a not so free marketplace. If we added to that the cost of unlimited liability exposure for even the most minor of errors of service, auto insurance would soon be unaffordable to many and over time even shrink the market reach and growth. So by adding "essential benefits" to every plan and the age banding of rates, increases are being dumped on many just as they enter the later years of their careers, still trying to get their retirement plans to recover from the market / government blunders of 2008 and 2009.
Adverse Selection RULES!
We all learned early that people who need insurance buy insurance. This simple reminder of human nature applies to the PPACA. Open Enrollment ends in just a little over 60 days from this post. So far, less than 25% of the Marketplace enrollments are the young healthy types that need to fund the cost of providing the care to the 75% of this group that could NOT get insurance elsewhere or wants the low cost premium that the subsidy allows. If this trend continues, indeed the carriers will form a line to the left for bale outs because they are "too big to fail".
Groups may end up King in the marketplace
Many in the industry have worried about groups, particularly small groups usually under 50 lives, can survive. Based on what we are seeing in rates, renewals and the various strategies being implemented, small groups will maneuver to keep their group contract health offering a a recruiting and retention tool, even at the cost of wage increases. Actually, at the expense of wage increases. Most market segments and industries do not have the excess margins that are frequently portrayed in media reports. There are cycles in every market segment begun by innovation and investment, rolling and growing, expansion and maturation, then contraction and resorting to begin anew. These cycles have grown shorter and more pronounced. I remember my boss in the mid 1980's complaining about buying a $700 fax machine because no one else he knew had one. A few years later, this same man told me I was going mad because I suggested that everyone on our traveling staff needed portable phones and portable computers.
All this to say ... small businesses that make up the small group market of less than 50 lives are 95% of all the businesses in our great country and 98% of the workforce. (US Chamber of Commerce) The pressure that the PPACA is putting on small business is severe, but not a blow that will end this creative and vibrant part of the landscape we call America.
The bottom line is this ...
The PPACA is loved only by the few that benefit from the redistribution of costs it perpetuates. Once given, benefits are impossible to reduce or eliminate, so like it or not, we are already a long ways down a historically One Way street. I remember COBRA being the end of all Group Insurance when it was passed. Rates went up and life went on. Indemnity Health Insurance died a slow death, and HMO's were going to kill us all, and HSA's and HRA's moved into the marketplace. Maybe the health insurance industry will eventually run out of ways to package the "orderly transfer of health care cost risk" but since there is "nothing new under the sun" we should just keep working for the innovative geniuses that define our clients and coworkers.