Employers in the 51-100 employee size bracket are anxious about the prospect of being added to the “small group” market that under the Affordable Care Act (ACA) currently cuts off at 50 employees (unless states opt to raise it). “Small group” health plans face tougher standards under the ACA than large plans, such as having to cover the ten “essential health benefits,” and therefore tend to be more expensive.
Under the ACA, beginning in 2016 states would no longer have the freedom to define “small group”; they would have to raise it to 100 employees.
Many health carriers are more interested in serving the large group market, giving large employers and their employees the benefit of greater variety of opportunity, and competitive prices due to competitive forces.
“Expanding the small group market to include all groups with up to 100 employees would have an immediate impact on premiums due to new rating rules, required essential health benefits, and minimum actuarial value and cost sharing requirements,” states a letter issued by 19 employer groups, including the Society for Human Resource Management.
Rate increase predictions
“As rates increase, more mid-sized groups may drop coverage or self-insure, resulting in additional rate increases for the small group market – including for those employers with less than 50 employees,” the coalition predicted.
Employer concerns about the impact of the mandated increase in the small group size definition prompted the introduction of legislation in Congress known as the
“Protecting Affordable Coverage for Employees Act,” or PACE. The Senate version, S.1099, was introduced by Sen. Jeanne Shaheen (D-N.H.) and two other co-sponsors.
“The PACE Act would make a helpful adjustment to the Affordable Care Act… by maintaining the health care status-quo for employee coverage,” Shaheen said in a statement upon introducing the bill.
The House version (H.R. 1624), has already garnered bipartisan support with 96 Republican cosponsors and 21 Democrats.
The White House had earlier announced a transitional policy allowing states a two-year reprieve from being forced to use the higher 100-employee definition. The proposed federal legislation would give states that flexibility indefinitely.
Thirty-four states have seized on the opportunity afforded by that two-year transition relief to continue to allow employers with more than 50 employees to remain in the large group market. But California, Colorado, Connecticut, Maryland, Minnesota, Nevada, New York, Vermont and Washington, have gone the other way, while eight states haven’t yet decided which way to go, according to a tally by The Commonwealth Fund, a private foundation focused on health policy.