ACA Provision Expands "Small Group" Definition

Insurers, Exchanges May Face Hitches as Obama Agrees to Keep Small Groups Small
– Inside Health Insurance Exchanges

Inside Health Insurance Exchanges interviewed Manatt's Joel Ario, a managing director with Manatt Health Solutions, for an article on the Protecting Affordable Coverage for Employers Act that was recently enacted by President Obama. The legislation changes a provision of the Affordable Care Act that was slated to expand the definition of a "small group"—from 50 or fewer workers to 100 or fewer—for plan years beginning in 2016.

Ario told the publication that the ACA's small-group-expansion provision had faced criticism from employer groups, insurers and state regulators, and Congress had been under pressure to address it. State insurance commissioners have advised against it since the law was enacted and saw little need for rate regulation for mid-sized employers. If the small-group market had been expanded, midsized employers with higher-than-average risk would likely have remained in the small-group market, which wouldn't have improved the overall risk pool. And employers with a younger workforce and better than-average risk would have had a financial incentive to self-insure. While the legislation gives states the option of expanding their small-group definition, Ario said few state regulators would be in favor of such a move.

"A few states may expand, but I would expect them to have problems," he said.