Concerns over large group plan exchange option overblown

Concern is being raised that a Patient Protection and Affordable Care Act provision allowing large group plans (defined as those offered to employers of 101 or more beginning in 2017) to offer plans on state health benefit exchanges could disrupt the large group market. The basis of the concern is an ACA requirement at Public Health Service Act Section 2701(a)(5). The section would apply the ACA’s mandate on individual and small group plans, requiring they use modified community-based rating (rather than risk rating) to large group plans in those states that elect to allow large group plans to be sold via their health benefit exchange marketplace:

(5) SPECIAL RULE FOR LARGE GROUP MARKET.—As revised by section 10103(a). If a State permits health insurance issuers that offer coverage in the large group market in the State to offer such coverage through the State Exchange (as provided for under section 1312(f)(2)(B) of the Patient Protection and Affordable Care Act), the provisions of this subsection shall apply to all coverage offered in such market (other than self-insured group health plans offered in such market) in the State.

My impression is this concern is overblown. It’s both unlikely that states will be interested in bringing large group plans into their exchange marketplace or that large group plans would want to participate. The Affordable Care Act’s enhanced risk spreading mechanisms contained in market rules and the exchange marketplace needed in the individual and small group markets are less necessary for large group plans that already benefit from greater scale and spread of risk. In addition, a robust private exchange marketplace is springing up to offer large employers more opportunity to create even larger pools and greater spread of risk.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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Frederick Pilot

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