Last week, the Protecting Affordable Coverage for Employees Act (PACE, H.R. 1624), a bill that amends the Affordable Care Act (ACA), passed the U.S. House of Representatives and Senate. If signed by President Obama, the legislation would give states the right to determine what size business constitutes a “small business,” a designation that would affect key elements of the health insurance coverage required under the Affordable Care Act.
Though the bill was bipartisan, its passage by Congress met with mixed reactions from retail groups.
Under current law, the small group market is defined as companies with 1–50 employees, but on January 1, 2016, the small group market would automatically expand to include companies with up to 100 employees. If PACE is signed into law by the President, however, states would determine whether or not to expand their small group market and Small Business Health Options Program (SHOP) Marketplace, which helps businesses provide health coverage to their employees, to include small firms with 51–100 employees in 2016.
Opponents of PACE contend that the current law, which would increase all state SHOP Marketplace pools automatically, will bring the costs of health insurance premiums down, while proponents argue that its stricter requirements for the small group market will result in higher premiums.
Under ACA, small employers follow different regulations from those for larger employers. For instance, health insurers that cover small employers must cover the “10 essential health benefits” and are only allowed to offer plans that fit into ACA’s preset actuarial value levels (platinum, gold, silver, and bronze), as reported by the HealthAffairs Blog. The blog also noted that small group plans “participate in the risk adjustment program and are part of a single risk pool for setting premiums. Insurers may only consider age, geographic location, family composition, and tobacco use in setting rates for small groups.” Conversely, large employers are not required to follow any of these requirements.
The Centers for Medicaid and Medicare Services (CMS) explains that for businesses to participate in the SHOP Marketplace, they must offer coverage to all of their full-time employees — generally those working 30 or more hours per week on average. In many states at least 70 percent of a business’ employees offered coverage must enroll in a business’ SHOP plan. In addition a business must have an office or employee work site within the SHOP’s service area to use that particular SHOP.
Prior to the PACE receiving Senate approval, John Arensmeyer, founder and CEO of the Small Business Majority, a national small business advocacy organization, issued a statement expressing the group’s disappointment that the bill passed the House. Arensmeyer said expanding the small group market in 2016 would increase the size of the insurance pool and that this would benefit the health care system overall.