In a just-released report, the Chief Actuary for the Centers for Medicare and Medicaid Services (CMS) predicts that 11 million individuals covered by small business health plans will experience premium increases, while 6 million will see reductions.

The report pegs the pending rate hikes to the new community rating system implemented by the Affordable Care Act (ACA) on Jan. 1, 2014. The community rating system narrows the differential between premiums charged for businesses with younger and presumably healthier work forces and those charged for businesses with older and presumably more medically needy work forces. While the premium ratios pre-ACA were as high as 5:1 or more, the new community rating system mandates a top ratio of just 3:1.

The report estimates that rates for younger insured workers will rise while those for older workers may moderate because of the new caps:

The adjusted community rating under ACA prohibits the use of gender, health status and claims history as rating factors, and restricts the premium rating ratio for adults to between young and old ages. These changes are expected to further relieve the financial burdens for older and sicker individuals as coverage could become more affordable for them. However, for younger and healthier individuals, premiums could increase since health status is no longer permitted as a rating factor and the new age rating band is limited to 3:1 for adults, less than what insurers typically have used.

Independent analysts told the CMS actuary that they expected 60 to 67 percent of small business plans to experience increases of anywhere from 5 to 20 percent.