Bipartisan Effort Fights Health Law Rule That Could Raise Premiums

Members of Congress from both parties, as well as some employers, insurers and state insurance commissioners, are calling for changes in the Affordable Care Act to prevent premium increases that are expected to affect workers at many small and midsize companies next year.

Lawmakers see the potential for a rare bipartisan agreement on the issue, after five years in which Republicans have repeatedly tried to repeal the law and Democrats have blocked their efforts.

At issue is a provision of the health care law that expands the definition of a “small employer” to include companies with 51 to 100 employees, subjecting them to stringent insurance regulation starting on Jan. 1. States have historically defined small employers as those with 50 or fewer employees.

Because many organizations with 51 to 100 employees will be reclassified as small employers, they will have to offer a package of “essential health benefits” specified by the health law — in some cases more generous than what they now offer. Insurers will no longer be allowed to set premiums for such groups based on their claims history, industry or size — factors now commonly considered.

The American Academy of Actuaries, a nonpartisan professional organization, said “the new rules may result in significant premium-rate changes for some groups” and would, in particular, increase costs for groups with relatively healthy workers or a younger work force. In theory, the new requirements could cause rates to decline, the academy said, but “factors exerting upward pressure on premiums are more likely to dominate.”

Congress originally ordered the change because Democrats believed that it would stabilize the insurance market for small employers by bringing in millions of new customers.

But experts worry that it could have the opposite effect in many states. “Market disruptions could occur,” said Monica J. Lindeen, a Democrat, who is the insurance commissioner of Montana and president of the National Association of Insurance Commissioners. “Defining the small-group market should be left to the states.”

Legislation to let states keep the current definition of “small employer” has won support from 229 House members, including 43 Democrats. The legislation has been endorsed by 43 senators, including 10 Democrats. Among the supporters: Senator Chuck Schumer of New York, the No. 3 Senate Democrat, and Senator Jeanne Shaheen of New Hampshire, the senior Democrat on the Small Business and Entrepreneurship Committee.

In addition, the legislation has the support of some significant business and industry groups, including the U.S. Chamber of Commerce, the National Federation of Independent Business, America’s Health Insurance Plans, and the Blue Cross and Blue Shield Association.

The chief sponsor of the Senate bill, Senator Tim Scott, Republican of South Carolina, said the measure would “ensure that small and midsize businesses are not faced with drastic premium increases as a result of the Affordable Care Act.”

Obama administration officials have sent mixed signals about their position on the legislation. Sylvia Mathews Burwell, the secretary of health and human services, said she was studying the issue and wanted “a smooth transition to the new requirements,” but the administration has not offered or endorsed any proposals.

The White House has generally resisted changes in the 2010 health law. President Obama said the law had been immensely successful, providing coverage to millions of uninsured people, despite “the constant doom-and-gloom predictions, the unending Chicken Little warnings” from Republicans.

The expanded definition of “small employer” would bring new companies into the small-group insurance market. These companies could obtain coverage through health insurance exchanges created especially for small businesses. The small-business exchanges have gotten off to a slow start, with enrollment far below expectations. Some officials see expansion of the small-group market as a way to revive these exchanges, whose technical and operational problems have been a political embarrassment to the administration.

Representative Frank Pallone Jr. of New Jersey, the senior Democrat on the health panel of the House Energy and Commerce Committee, said he was pleased to see Republicans and Democrats working together to “improve and strengthen” the law.

That cooperation represents “a turning point,” said Mr. Pallone, a strong supporter of the Affordable Care Act. He said it might make sense to delay the new definition of “small employer” for a few years.

Sabrina Corlette, a consumer advocate and professor at the Health Policy Institute of Georgetown University, said the new definition might be “more trouble than it’s worth.” The main risk, she said, is that “premium rates for many midsize employers will rise, perhaps significantly.”

Alissa Fox, a senior vice president of the Blue Cross and Blue Shield Association, said that “about two-thirds of midsize employers can expect substantial rate increases” after the new rules take effect. Congress needs to act soon, she said, because many employers decide in September and October on the coverage they will offer employees in the coming year.

Nicholas A. Moriello, an insurance agent in Delaware, said the health care law included two contradictory provisions affecting employers with 51 to 100 employees.

On the one hand, he said, such companies are required to offer coverage to workers or pay a tax penalty, just like big corporations. On the other hand, companies with 51 to 100 employees will be defined and regulated as small employers starting next year.

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