Houses Votes to Repeal a Small Piece of Obamacare

The House on Monday passed legislation to nix an upcoming Obamacare mandate requiring employers with 51 to 100 employees to shift the health coverage they offer to plans on the small-group market.

Currently, the small-group market consists of businesses with up to 50 employees. But that is slated to change in 2016, when a new mandate will expand the market to include employers with 51 to 100 workers. Right now, these mid-size businesses can offer employer-based health insurance on the large-group market.

Under the law, small-group market plans must cover a larger array of health services than large-group market plans and also have more discrimination protections. The idea is to protect small employers from extreme rate increases if one of their employees gets very sick. But many states are not ready for the transition that would require more employers to use the small-group market. As a result, Democrats and Republicans have called for an alteration of the law.

The Protecting Affordable Coverage for Employees Act (PACE Act) — spearheaded by Reps. Brett Guthrie (R-Ky.),  Tony Cardenas (D-Calif.), Markwayne Mullin (R-Okla.) and Kyrsten Sinema (D-Ariz.) — would let states choose whether to expand the small-group market to include businesses with up to 100 employees.

“Because the impact of current law will vary by state, defining the small-group market should be left to the states,” Rep. Joe Pitts (R-Pa.) said on the House floor before lawmakers passed the bill on a voice vote.

Supporters say the mandate could cause health premiums to rise because health plans on the small-group market are subject to different regulations than those on the large-group market. They point to a study by the actuarial firm Oliver Wyman that found that premiums would increase for about 64 percent of workers of businesses with 51 to 100 employees if the mandate takes effect. The study says the average premium increase would be 18 percent per employee.

While support is strong on both sides of the aisle, there are opponents to the repeal.

Washington State Insurance Commissioner Mike Kreidler said at a House hearing in early September that his state would actually see premium increases on the small-group market if the legislation becomes law.

Kreisler credited successes in Washington’s small-group market to the “anticipation that the group size would expand to 100.” Washington saw its small-group market enrollment increase from 108,000 to 125,000 people since 2014. Since 2012, the number of insurers has increased from eight to 12.

Furthermore, Kreidler warned that the bill would actually cause premiums to rise on Washington’s small-group market. Insurers would have to re-file their plans for 2016, which “would create chaos for our brokers” and most likely cause rates to go up on the small group market, Kreidler said.

Another skeptic, Rep. Frank Pallone (D-N.J.), said he would rather see the mandate delayed until more states are ready to expand their small-group markets, rather than simply repealed.

But a Democratic House staffer familiar with the negotiations around the bill said repealing the mandate was the only way to get support from House Republicans on the divisive issue of Obamacare. The staffer also said the Obama administration — which is being sued by House Republicans over taking executive actions to implement the Affordable Care Act — made clear to the lead sponsors that it would not make another unilateral move concerning Obamacare. Legislation was their only option

The Senate is under a time crunch to pass the bill before the mandate takes effect in 2016. Senate Majority Leader Mitch McConnell’s office did not immediately respond to a request for comment, but there is support in the Senate. A companion bill by Sen. Tim Scott (R-S.C.) has the cosponsors of 34 Republicans and 11 Democrats.

The administration has remained silent on the measure. The Department of Health and Human Services did not respond to a request for comment on the bill.

Morning Consult