Short Takes On News & Events

WellPoint Sees Small Employers Dropping Health Coverage

By Jay Hancock

July 25th, 2013, 5:49 AM

As the nation prepares to roll out the next phase of Obamacare, the second biggest medical insurer said Wednesday that it expects to lose members in health insurance plans sponsored by smaller employers.

At the same time, WellPoint expects membership gains in self-insured employer plans and in the kind of individual plans that will be sold in subsidized exchanges starting Oct. 1.

“I would not call it an academic assumption at this point,” WellPoint chief financial officer Wayne DeVeydt said on a conference call with stock analysts. “We continue to see small group attrition accelerate even more as we get to the back half of the second quarter. And we expect that to continue.”

The lost customers aren’t just signing up with WellPoint rivals, according to DeVeydt. “Some of it is going into the uninsured ranks,” he said.

The Obama administration recently postponed enforcement of a requirement that employers with 50 employees or more offer health coverage next year or face fines. But the delay in the “employer mandate” wasn’t the reason WellPoint gave for losing small-group members. Nor did executives respond directly to analyst’s questions about whether small employers are “dumping” workers into the subsidized individual market.

Rather, small employers have hesitated to buy coverage for next year because of uncertainties surrounding the online exchanges offering individual and small-group plans, the company said.

“What we are seeing is that more of the small group employers today still can’t make a decision on choices yet because those choices are not readily available in the market until the exchanges are fully up and running,” DeVeydt said.

Some smaller companies are shifting to self-insurance for health benefits to avoid taxes and benefit requirements associated with the Affordable Care Act. WellPoint said it’s seeing better-than-expected growth in selling claims processing to self-insured employers.

The insurer expects to make up some of the lost small-group business in plans sold to individuals through the exchanges, also known as marketplaces.

“Our current expectation is that fully insured, employer-based coverage will likely see membership declines in ’14, with growth skewed to individual coverage offered through the exchanges,” WellPoint CEO Joseph Swedish told analysts.

5 Responses to “WellPoint Sees Small Employers Dropping Health Coverage”

  1. wilson says:

    Maybe the second biggest medical insurer should shut up? Weren’t their lobbyists in the room when Congress was creating all of the Obamacare rules? Didn’t they have AHIP representing their interests in those rules? Didn’t they sign off on Obamacare knowing that they would not be excluded from participating in the exchanges? Now, all of a sudden, they have nothing good to say? Sounds to me like the Neanderthals in the Republican Party got to them, huh? I say, once you sign on and agree to support the plan, don’t punk out! Don’t be a wuss! Grow a set!

  2. Howard says:

    “If you like your health insurance, you can keep it.”

  3. Morgan says:

    Keep my health insurance? I kept mine! While everybody has 20/20 vision about the past, nobody has 20/20 vision looking forward into the future. The CBO is a non-partisan group in Washington that gets paid to gaze into a crystal ball and prognosticate about future outcomes using super-computers to run the numbers based on very complex formulas. Any other study about the future of healthcare is either politically motivated or they are flat-out lying. In my opinion, the CBO does a good job with the data that they have. Here’s the best guess available about Obamacare…

  4. wilson says:

    “If you like your health insurance, you can keep it.”

    Exactly! I liked my health insurance and I kept it! Pretty cool, huh?

    Not only that, millions of uninsured Americans will be able to afford health insurance on January 1st, 2014!

    Ain’t that great?

  5. Wendy says:

    If the definition of small employer is less than 50 employees, then there’s all kinds. Some small employers care about their employees and some don’t. If a small employer cares about workers welfare, then they will make sure they have healthcare. Caring employers will find a way to continue healthcare benefits. If necessary, caring employers can coordinate with the health exchanges to make sure employees get the subsidies that are offered by the government. Alas, you will always have employers that treat workers as a liability. You will always have employers that hire and fire workers regularly. Corrupt and immoral employers like that will always get their just rewards. Lousy employers will never keep loyal workers if they keep treating them badly. Loyal workers will leave and find better treatment elsewhere. In my experience, lousy employers are usually Republicans.