Help support keeping small group size at 50

State insurance departments have traditionally determined the size of small group markets, with almost all states defining their small group market to include employers with 1─50 employees. However, beginning on January 1, 2016, the Affordable Care Act (ACA) expands the definition to include employers with up to 100 employees.

Blue Cross of Northeastern Pennsylvania, in conjunction with the Blue Cross and Blue Shield Association and its 37 independent licensees, is requesting your support in maintaining our state's ability to determine the size of their small group market. Using the attached template for either employers or brokers/Chambers, let your members of Congress know that you're not in favor of expanding the small group size to 100.

Why does this matter to me?

Premiums will increase for the vast majority of small employers

Expanding the small group market definition will mean mid-sized employers will have to follow ACA small group market rating rules and regulations, including:

• Modified community rating rules: The only permissible rating factors will be age, geography, tobacco use and family size, which could lead to significant rate changes
• Prohibitions on health discounts: Today, premiums typically reflect a group's actual claims experience or other discounts in the 51─100 market. In 2016, these discounts will no longer be permitted, meaning that most companies will see their rates increase 

Actuarial analysis by Oliver Wyman estimates roughly 2/3 (64%) of members in groups with 51─100 employees will receive premium increases of 18% on average in 2016 as a result of new rating rules.

Further, expansion of the small group market will require mid-size employers to adopt actuarial value, cost-sharing limits and essential health benefit requirements. This could increase premiums by an additional 3%─5% on top of the impact from changes in rating rules. Overall, employers in the newly defined small group market (1─100 employees) could see premiums increase up to 8% in 2016.
 

Mid-size employers will be prevented from keeping their current plans

Expanding the small group market definition prevents mid-size employers (51─100 employees) from keeping their current health insurance plans. Employers will no longer be able to purchase plans (or renew plans after October 2016) that do not conform to the ACA's rating rules, essential health benefit requirements, cost-sharing limits and actuarial value requirements.

Rather than incur additional costs associated with the ACA rules, some healthier mid-sized groups may elect to leave the newly expanded small group market by either opting to self-fund or drop coverage entirely.

The departure of healthier mid-sized groups will destabilize the market in the newly expanded small group market, which will exacerbate over time as more and more mid-sized employers opt to avoid the new requirements and related premium increases, which could lead to unsustainable rate increases in 2017 and beyond.

Expanding the group size is opposed by many key stakeholders

Many key stakeholders have concluded that the small group market should not be expanded, such as:

• The National Association of Insurance Commissioners
• A collection of nearly 20 employer groups, including the U.S. Chamber of Commerce, the National Federation of Independent Business and the National Association of Health Underwriters
• An array of leading experts in the health policy community (e.g., American Enterprise Institute, Georgetown Policy Institute)

What can you do to help?

Using the attached template for either employers or brokers/Chambers, let your members of Congress know that you're not in favor of expanding the small group size to 100. More information on the ACA and how it affects your business is available on our Health Care Reform website for employers.

Sincerely,

Kent R. Davidson

Vice President, Sales

Blue Cross of Northeastern Pennsylvania