Dem senators warn Obamacare rule ‘particularly harmful and disruptive’

By SEAN HIGGINS, March 24, 2015, 5:00 am

Six Democratic senators and one independent have asked the Department of Health and Human Services to a delay a new rule that would likely force small businesses to pay more for employee health insurance under the Affordable Care Act, aka Obamacare. The senators warn that if the administration goes ahead with the change it would be “particularly harmful and disruptive” to small businesses.

Starting in 2016, the Obamacare change will require businesses that employ between 51-100 people to purchase insurance in what the government defines as the “small group market,” rather than the market for large group plans. The senators warn that the change will inflate health care costs for those businesses.

“[T]hey could experience higher premiums, less flexibility, and new barriers to coverage. We therefore encourage you to delay the effective date in the definition change for two years so the market can more smoothly transition to the new rules,” the senators wrote in the March 12 letter to HHS Secretary Sylvia Burwell.

The letter was signed by Democrats Heidi Heitkamp (N.D.), Jon Tester (Mont.), Joe Machin (W. Va.), Claire McCaskill (Mo.), Chris Coons (Del.), Joe Donnelly (Ind.). Maine’s Angus King, an independent who caucuses with the Democrats, also signed it.

A spokeswoman for HHS confirmed the department received the letter but had no further comment. A staffer for one the senators said they had still not received a response from the administration.

In the letter, the senators note that the administration has delayed implementing other aspects of the healthcare law. They argue their requested delay is warranted because the administration hasn’t yet implemented certain programs designed to help small businesses comply with the law.

“Because these … building blocks have not occurred as anticipated, we believe that continuing on with the redefinition of small group next year would be particularly harmful and disruptive,” the senators wrote.

51 employees is the point at which Obamacare will require businesses to provide health insurance for employees or pay a penalty. About 9 percent of businesses that employ between 51-100 people currently provide full health insurance, according to a March study by the American Academy of Actuaries. Overall,159,000 businesses of that size provide coverage.

The academy noted the change could also result in companies with 50 or fewer employees dropping coverage due to rising premiums caused by the larger companies being forced out of the small group insurance pool.

“In response to any higher premiums, groups sized 1-50 may reconsider their decision to offer health insurance, especially because they are not subject to the employer-shared responsibility provisions,” the academy said.

Heitkamp, Manchin and King have previously expressed concern about Obamacare’s effect on small businesses. The three proposed last year making the law’s employer mandate kick in with businesses that employ 100 or people, not 50 or more.