Evaluating Variation in Health Risk Across Small Firms and Its Implications for the Future of the Small Group Market

Grant: #73779

Grantee Institution: University of Southern California

Principal Investigator: Erin Trish, Ph.D.

Grant Period: September 1, 2016 - August 31, 2017

Budget: $149,978

This project is funded as part of the Robert Wood Johnson Foundation’s solicitation “Policy-Relevant Insurance Studies” (PRIS), which supports studies that evaluate or predict the effects of policies or policy changes related to health insurance coverage. The goal of this research is to inform policy discussions about the impact of community rating rules on adverse selection and premium affordability in the small group market as well as the likely effects of policies designed to preserve the stability of that market. The researchers will use claims data from the Health Care Cost Institute (HCCI) and other sources to: (1) quantitatively assess the extent of variation in health risk and expenditures across small group market firms and evaluate the implications of this variation for firms’ decisions to self-insure across states as a result of the Affordable Care Act’s community rating rules; (2) simulate the potential impact of policies limiting the sale of stop-loss insurance with low attachment points on decisions to self-insure; and (3) incorporate HCCI claims data from individual market policies to simulate the potential impact of states merging their individual and small group market risk pools.