Legislation Could Prevent Premium Increases for Mid-Size Employers
August 13, 2015 09:31 AM
There is growing support for legislation in the U.S. Senate to halt the required expansion of the small group market under the Affordable Care Act (ACA). In April 2015, Senator Tim Scott (R-SC) and Senator Jean Shaheen (D-NH) introduced the Protecting Affordable Coverage for Employees (PACE) Act (S. 1099), which now has 27 bipartisan cosponsors in addition to Senators Scott and Shaheen. The legislation seeks to address concerns that expanding the small group market to employers with 51-100 employees as currently required will result in premium increases for mid-sized employers. Instead, the bill would maintain the current definition of small group market which only applies to employers with 50 or fewer employees.Most recently, according to reports, the Congressional Budget Office has estimated that the bill would save $400 million over 10 years. This legislation could keep premiums from rising for home health and hospice agencies with 51-100 employees that offer health insurance.
“The PACE Act will ensure that small and mid-sized businesses in South Carolina and across America are not faced with drastic premium increases as a result of the Affordable Care Act,” said Senator Scott in announcing the legislation. “Working together, we can find common sense solutions to stop this major disruption for many mid-sized businesses, their employees and their families. I would like to thank Senator Shaheen for working with me on this important effort to support small businesses on Main Street.”
“Small businesses are the backbone of New Hampshire’s economy,” said Senator Shaheen regarding the bill. “The PACE Act would make a helpful adjustment to the Affordable Care Act for small and mid-size businesses in the Granite State by maintaining the health care status-quo for employee coverage. I appreciate Senator Scott’s willingness to work on a bipartisan modification to current law that addresses the needs of businesses in New Hampshire and across the country.”
On January, 1, 2016, the definition of small group market under the ACA is scheduled to expand from employers with 50 or fewer employees to employers with 100 or fewer employees. Some have expressed concern that the scheduled expansion will result in higher premiums for mid-sized employers. This is because in the small group market there are fewer employees over which to spread the risk. These concerns were supported by an Oliver Wyman report that stated, “[r]oughly two-thirds (64%) of members in groups with 51-100 employees would receive a premium increase in 2016 as a result of changes in rating rules and expanding the market, with these groups receiving an 18% increase on average.”
At a hearing in July, the U.S. Senate Health, Education, Labor & Pensions Committee received testimony from Thomas Harte, President of Landmarke Benefits, an employee benefits broker in in Hampstead, New Hampshire. “We anticipate this expansion will result in clients of 51-100 employees receiving significant premium increases in 2016,” he said. “Furthermore, these clients will not be able to keep the plan or the plan options they have today and, in some cases, their current health plan may not serve the small group market. They will also have to adapt their plans to the ‘metal plan’ design options, which means that their covered services may change and be forced to either reduce benefit offerings or increase them to meet the actuarial values tied to the metal plans.”
NAHC Report will continue to provide updates regarding the status of this legislation.