The U.S. House of Representatives in a voice vote on Sept. 28 unanimously approved H.R. 1624, the Protecting Affordable Coverage for Employees Act, which would redefine small employer as having 50 or fewer employees and give states the option of expanding the definition to include employers with up to 100 employees. The previous definition had been groups of 99 and fewer throughout the nation. The bill had bipartisan support with 235 cosponsors.
Starting Jan. 1, 2016, health insurance policies sold or renewed for employers with 51-99 employees will be subject to small group health plan rules set by the ACA, such as having to cover essential health benefits and observe restricted rating bands, which are highly likely to increase premiums.
At the same time, employers with 50 to 99 workers are compelled to buy coverage because they will be defined as large employers that must purchase health insurance for employees or pay a fine, also starting in 2016. Many mid-sized businesses will have to switch policies while sustaining significant premium increases, supporters of the bill stated.
The impact of the redefinition would raise premiums for 64 percent of employers with 51 to 100 employees, by an average of 18 percent, according to actuarial consultant Marsh & McLennan Co.
“The 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,” Janet Trautwein, CEO of the National Association of Health Underwriters, said in a news article.
In contrast, large employers with more than 100 workers are not confined to the small-group market and under the ACA, they are able to buy cheaper, less regulated policies that have more tools at their disposal to control costs.
However, defenders of the ACA provision argued that the expansion would eliminate inadequate coverage for more people, and reduce the number of uninsured Americans.
The Congressional Budget Office estimated on Sept. 15 that a repeal of the expansion of the small group market (with passage of H.R. 1624) would reduce premiums for health insurance for many firms with between 51 and 99 employees. Those firms could again offer insurance that does not meet standards required by the ACA. The CBO also said: (1) federal revenues could increase and (2) the number of people with health insurance coverage would not change substantially, if H.R. 1624 is enacted.