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Obamacare changes the rate paradigm for businesses as well as individuals

Ideastream/Kaiser Health News story   

Paul Siperke is the co-owner of Fat Head's, a popular brew pub in Cleveland. He has fewer than 50 full-time employees, so he's classified under the Affordable Care Act as a small business.  Images

He doesn't have to provide health insurance to his employees, but that's what he's been doing since the bar opened in 2009, despite some pretty dramatic volatility in rates.

"They just seemed to keep going up every year," he says. "One year we got a 38 percent increase, another year we got 11. One year we got three."

This year, under the Affordable Care Act, he saw another hike — this one about 20 percent.

"It just seems odd that we get such a drastic price increase when nothing has really changed with us as far as our employees and health issues," he says.

Most of the workers at Fat Head's are in their 20s and 30s. They are healthy, enthusiastic about their jobs and grateful for health coverage.

Until now, if employees were healthy and claims were few (as they are at Fat Head's), the company's cost of insuring those employees was relatively low. But, for a small business, if even one employee was in a car accident or was diagnosed with cancer, the amount the insurance company charged the firm to cover those employees could skyrocket the next year. The insurance industry called this "experience rating," and it is changing under the health law, says Steve Millard, who heads a small business association in Cleveland. Read more. 

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