Last week, Congress returned from its monthlong August recess, meeting with constituents. There are few issues that are as time-sensitive for health insurance agents and brokers and their employer clients than the pending small-group expansion under the Affordable Care Act.
Beginning in January, the expansion will change the definition of small employers from groups of up to 50 employees to include groups of up to 100 employees. Earlier this year, Sens. Tim Scott, R-S.C., and Jeanne Shaheen, D-N.H., introduced S 1099, and Reps. Brett Guthrie, R-Ky., and Tony Cárdenas, D-Panorama City, introduced HR 1624, bipartisan legislation that would repeal this national standard and instead give states the ability to set their own definitions, as under current practice.
The Affordable Care Act is riddled with costly requirements that have led to higher costs for employees. This legislation will provide relief to businesses struggling to comply with the president’s health care law and protect employees from even higher costs as a result.
Employers, their employees and their families could face significant adverse impacts if this expansion goes forward as planned. These groups are expected to face an average premium increase of 18 percent next year, and midsize employers would suddenly be forced to comply with modified community rating rules, actuarial value, cost-sharing, essential health benefit requirements and other rating rules.
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For example, a midsize employer in Rancho Cordova has 75 employees on its group health plan. The employees have a composite rate of about $350 each under the “large group” structure of rating in California. When this group is moved to the “small group” market next year, each employee will have a different rate depending on his or her individual age. In addition to the problem the employer will have dealing with 75 different rates for the work force, those seasoned employees who are closer to age 65 rather than age 20 will pay significantly more than the younger co-workers.
It seems illogical to classify these employers as an Applicable Large Employer subject to Employer Shared Responsibility provisions of the ACA, and at the same time switch them to small-group status. These employers will no longer be able to keep their existing plans, which will equal disruption for all their enrolled employees and their families.
We’ve already seen the issues these forced changes have caused for small employers, with some getting rate increases in the 30 to 50 percent range as their pre-ACA plans are being removed from the market.
Ever since the Affordable Care Act was passed, California has demonstrated time and again a leadership role of proactive proficiency. Our market structure for small, midsize and large employers works well and recognizes that there are significant structural differences between a company with 15 employees and one with 85 employees, both of which would be constricted into one market segment under the soon-to-be-implemented law.
Both bills aimed at repealing the law are gaining momentum, with nearly half of the House and more than a quarter of the Senate signed on as co-sponsors. We need to continue the push and make sure Congress hears from agents, brokers, consultants, employers and employees on this important issue.
Marcy McCulloch is president of the Sacramento Association of Health Underwriters.