House votes unanimously to repeal ACA small group market expansion
By Melissa A. Winn
September 28, 2015 - Employee Benefit News
In a unanimous vote, the House passed legislation today that would rescind
the Affordable Care Actfs expanded definition of a small employer. The
bipartisan bill has had strong support from employers and benefit industry
insiders who feared the expansion could lead to premium increases and jeopardize
the ability for small and mid-sized businesses to compete in todayfs market.
The benefit industry applauded the billfs passage.
gThe Big eIf is pleased to see this legislation pass the House of
Representatives with such strong bi-partisan backing,h says Robert Rusbuldt, Big
gIfh president & CEO. gOne analysis from the actuarial firm Oliver Wyman
estimated that the effect of expanding the definition of the small employer
would result in nearly two-thirds of workers in small to mid-size firms
receiving premium increases in 2016. H.R. 1624 would protect small to mid-sized
employers and employees at those firms from seeing significant premium increases
that are anticipated due to the Affordable Care Act.h
The ACA proposes that effective Jan. 1, 2016, the definition of a small group
employer increases from 1-50 employees to 1-100 employees. The Protecting
Affordable Coverage for Employees Act (PACE) would maintain the current
definition of a small group market as 1-50 employees and give states the
flexibility to expand the group size if they feel the market conditions in their
state necessitate the change.
The PACE Act, gwill help preserve existing health insurance options for
medium-sized businesses, preventing significant increases in premiums, and
reducing the compliance burden for small businesses, particularly those that
purchase fully insured coverage,h says Les McPhearson, CEO of United Benefit
Advisors.
The expansion is intended to make insurance more affordable for the smallest
employers by expanding the risk pool to include larger companies. It also aims
to increase the number of participants in the ACAfs Small Business Health
Options Program, also known as the SHOP exchanges.
The expanded definition would, among other things, mean the ACAfs small group
rating limitations would apply to more employers, many that were previously
considered large employers. Large employer rates are set using various
factors such as claims history, industry and location. In the small group
market, carriers can set rates based only on age, family size, geography, and,
in most states, tobacco use.
Mid-size employer duress
gThe expansion will prevent mid-size employers from keeping the plans they
currently have as they will have to select a new plan offered in the small group
market,h says Janet Trautwein, CEO of the National Association of Health
Underwriters. gMid-size employers will be subjected to the modified community
rating rulesc[and] the mid-size employers will not be able to receive discounts
based on their actual claims experience.h
She adds, gThese employers will now have to comply with the actuarial value,
cost-sharing and essential health benefit requirements, which could add an
additional 3% to 5% to premiums.h
Combined with other rating rule changes, premiums could increase by up to 8%
in 2016, she predicts, and reiterates that recent analysis finds an alarming
two-thirds of groups in the 51-100 market would receive premium increases of an
average of 18% in 2016.
gIf the pending small-group expansion goes forward as planned, many employers
could lose the coverage that they have had in the past because insurers do not
participate in the small-group market in their state,h McPhearson
agrees.
Other employers will choose to drop coverage and send employees to the
marketplaces and others will choose to self-insure, McPhearson says.
The PACE billfs passage gwill help to ensure that Americans will continue to
receive their employer-sponsored insurance, as 90% of employers in the 50-99
market already provide insurance,h he adds.