Obamacare will hit small businesses with higher rates, lower benefits, says major insurance broker

By Glynis Kazanjian


Frank Kelly Jr.

The chairman of one of Maryland’s largest health insurance brokerage firms predicted small businesses would begin to feel the real effects of Obamacare when they get their renewal notices Jan. 1, which will bring higher rates and fewer benefits.

“We just got the rates last week – what the marketplace has not seen yet,” Frank Kelly, Jr., founder of Kelly and Associates Insurance Group,  said in an interview. “I’ve seen the increases. Some are going to get decreases, but by far that’s the minority.”

Kelly said his firm ran the premium rates for every health insurance company that sells policies in the small group market, including Aetna, Kaiser Permanente and United Healthcare, for groups from two to 50 people.  Kelly said he saw a 46% increase for a nine-person group, a 34% increase for a 31-person group, a 23% increase for a four-person group and a 32% for a one-person group.

“We are not talking about theory anymore,” Kelly said. “The rubber meets the road Jan. 1. In our business we are the ones who have to deal with the businesses directly.”

Kelly was a panelist at a health care forum hosted last Friday by the Baltimore Business Journal. Other panelists included Rebecca Pearce, executive director of the Maryland Health Benefit Exchange, Bradley Herring, professor of public health policy and management  at Johns Hopkins Bloomberg  School of Public Health and Dr. John Chessare, chief executive officer of Greater Baltimore Medical Center Healthcare.

Frustrating implementation of flawed law

While all the panelists agreed that the goals of the Affordable Care Act (ACA) were laudable, much of the discussion centered around frustration with implementing a 2,000 page bill that was signed into law by President Obama  in 2010.

“The bottom line is this act is a monster,” Kelly said. “The bill tries to solve too many problems in one law. I’m not an advocate of repeal, but we definitely need some changes to the law.”

Kelly is a former Democratic state senator from Baltimore County and a longtime board member of the University of Maryland Medical System. He currently serves as board chairman of the system’s St. Joseph’s Hospital Center. He is in his second term on the Board of Regents of the University System of Maryland.

Kelly cited over 200,000 rules and regulations, saying they would be thicker than the IRS code by the time the administration was done.

Herring said as a result of adding a complex law on to an already complex system the ACA is really hard to understand. “What we’re seeing now is all the difficulties of implementing a very, very complex law.”

“This bill is flawed,” Chessare said. “Everybody knows it, but it is the best we can do in the political situation we find ourselves in.”

Health Exchange director defends change

Rebecca Pearce

Rebecca Pearce

Pearce, who oversees the implementation of the health insurance exchange in Maryland, defended the merits of the law and reminded the panelists that the state was only seven weeks into a very long implementation period.

“Think about what the insurance market is today,” Pearce said. “What we’re doing is a really big change,” Peace said. “We are able to insure people that we were unable to insure before.”

But Pearce also acknowledged that implementing the law had not been easy. With an Oct. 1 launch date, she said federal regulations were still coming out as late as August and September.

“We are implementing something that is not easy to implement,” Pearce conceded. “That being said, Maryland Health Connection is up and running and every day we are doing something slightly better.”

As of Nov. 16, 2,250 individuals have enrolled in health plans through exchange, far from the 150,000 health officials are aiming for by April 1.

Small group markets will have to renew policies for 2014, but the small business health exchange – which offers tax credits to help subsidize premium costs – now won’t be open until April. The state has delayed the opening twice.

Rate increases have been the norm

“Rate increases are something the small business community has become accustomed to, said Ellen Valentino, Maryland director of the National Federation of Independent Businesses. “The 2014 increase will come as no surprise. It is unfortunate and will come on top of what appears to be a growing call for a minimum wage increase. Tough business decisions will have to be made.”

Kelly chastised the Obama administration for promising the American public they could keep their health plans if they liked them. He said the law required changes, and if he told people what the administration had, he would lose his license.

“We all knew it wasn’t really true,” Herring said. “It was political messaging.”

Kelly said most haven’t had to deal with the real impact of the law yet, but beginning Jan. 1 they will.

“Any measurement of success of the law has not really taken place yet,” Kelly said.

About The Author

Len Lazarick


Len Lazarick was the founding editor and publisher of MarylandReporter.com and is currently the president of its nonprofit corporation and chairman of its board He was formerly the State House bureau chief of the daily Baltimore Examiner from its start in April 2006 to its demise in February 2009. He was a copy editor on the national desk of the Washington Post for eight years before that, and has spent decades covering Maryland politics and government.


  1. Liken' ObamaCare

    Interesting that Mr. Kelly, an insurance broker, doesn’t like the fact the rates are going up and the benefits are going down? Doesn’t this mean more profit for insurance brokers? If he’s going to collect higher premiums shouldn’t he keep his mouth shut?

  2. md observer

    Sounds like another tough outing for Ms. Pierce. She can’t address head-on any concerns regarding premium rises in the small-business insurance market cited by Mr. Kelley. So she says “We are able to insure people that we were unable to insure before.” Her statement is valid; but not relevant to the small-business market because she is referring to the individual market.

    Yes, Maryland is insuring people who were not insured before. Obamacare thus far has signed up 83,991 through the Primary Adult Care program to get free insurance paid by taxpayers on January 1, 2014. And a total of 2,253 Marylanders have enrolled in private health plans through Maryland Health Connection, while about 73,000 policy holders around the state will lose their insurance, according to the Maryland Insurance Administration.

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