Opinion

Obamacare Endangers Small Business Health Coverage… On a Technicality

If you could lower health insurance premiums for small businesses by 18 percent next year by implementing a commonsense, bipartisan reform, would you do it?

Sounds like a no-brainer. And yet the Department of Health and Human Services appears content to let this opportunity slide by.

To deliver these savings, federal officials would simply need to delay a technical provision within the Affordable Care Act that aims to change the definition of the small group market.

For the sake of small businesses across the country, our leaders need to do just that.

Next year, the ACA will define employers with 51 to 100 workers as “small businesses” for purposes of buying health coverage. Historically, these firms have been included in the large-group market. Making the change will impose additional mandates on these employers, foisting higher premiums, less flexibility, and new barriers to coverage on them. As a result, workers will lose coverage — and be forced into the ACA’s exchanges, where taxpayers will have to pick up part of the tab.

Although the looming change is still more than six months away, federal officials cannot dither any longer. Next year’s premiums are expected to be much higher than this year’s, thanks to increases in underlying medical costs and other trends. The definitional change is poised to add to that burden.

According to a report from Oliver Wyman, a consultancy, benefit package changes, deductible changes, rating changes and limitations, and other issues will drive up premiums in 2016. Sixty-four percent of those in the newly redefined small-group market would see an 18 percent premium increase, on average. Some employers could easily see premiums jump 35 percent or more.

Employers facing significant premium hikes could choose to self-insure, drop, or downgrade coverage. The U.S. Bureau of Labor Statistics indicates that such decisions could impact as many as 8.8 million workers.

The new definitional change will also reduce choices for small businesses. Many national insurers offer large-group coverage in almost all states. But far fewer are active in the small-group market.

It doesn’t have to be this way.

The ACA was supposed to have provided employers with between 51 and 100 staffers two full years of experience with the employer mandate and the Small Business Health Options Program exchanges before re-categorizing them into the small-group market.

But that hasn’t happened. Both the employer mandate and SHOP have been delayed. As a result, continuing on with the small-group redefinition in 2016 would be particularly harmful and disruptive.

Unfortunately, the Obama Administration has been quiet about whether it will delay this definitional change, too.

Federal officials should speak up. A legal analysis from the law firm Alston Bird commissioned by my organization affirms that HHS has the authority to put off the change.

Legal birding aside, common sense should dictate that the definition, at the very least, should be delayed just as the other components of the ACA were postponed. These changes were supposed to fit hand-in-glove — and complement a smooth transition for small businesses into a more heavily regulated market.

In response to a letter from seven Senate Democrats led by Senator Heidi Heitkamp (D-S.D.), HHS Secretary Sylvia Burwell indicated that she will “continue looking into this matter.”

As HHS investigates and deliberates, insurers and employers will be making plans for 2016. If insurers are forced to raise rates because of nothing more than a misguided definition, then the agency and its leaders deserve blame.

Since the Administration has not yet affirmed that it has the authority to provide relief, Congress should take the lead and pass the PACE Act. This bipartisan, common-sense legislation would allow states to maintain the current small-group market definition in order to prevent premium increases and disruption for small and mid-sized businesses.

Maintaining the existing small-group market will promote stability and predictability in health insurance premiums while allowing small and mid-sized businesses to keep working employee insurance plans intact.

The right call is crystal clear. Federal officials just need to make it.

Joel White is President of the Council for Affordable Health Coverage.

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