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Letter to the House on Protecting Affordable Coverage for Employees Act (H.R. 1624)

September 28, 2015

Dear Representative:

On behalf of the three million members of the National Education Association (NEA) and the students they serve, we are writing to urge you to Vote Yes on the bipartisan legislation, Protecting Affordable Coverage for Employees Act (H.R. 1624) schedule for a vote today on the suspension calendar, introduced by Reps. Guthrie (R-KY), Cardenas (D-CA), Mullin (R-OK), and Sinema (D-AZ). This bill would amend section 1304(b) of the Affordable Care Act (ACA), which extends the definition of the small group market to include employers of 51 to 100 employees, and would instead allow states to determine to which group market such employers belong. Votes associated with this issue may be included in the NEA Legislative Report Card for the 114th Congress.

While we strongly support the ACA which ensures health care access for millions of children across the country and provides an opportunity for Americans to obtain quality, affordable care, we believe this bill provides a needed improvement. NEA believes HR1624 is an excellent place to start and fully appreciates Congressional efforts on this issue, but we would support full repeal of the provision redefining the small group market size.

More than 930 school districts throughout the country have between 51 and 100 employees. Many of these school districts participate in health plans, such as consortia and trusts, which also cover small, mid-size and large employer groups in order to spread the insurance risk across more employees and to keep costs down. As large groups, these consortia and trusts have been able to negotiate affordable and high quality health benefit plans unavailable in the small group market. In addition, these consortia and trust plans have been successfully run and administered for up to 40 years in some locations.

Prior to the ACA, most states defined small employer in connection with a group health plan as those having up to 50 employees. The ACA expanded the definition for non-grandfathered, fully insured plans, with plan years beginning in 2016, to include employer groups with up to 100 employees. As a result, the ACA small group market rules, including those related to benefits coverage, cost sharing requirements, actuarial value and rating restrictions, will now apply to groups with 51 to 100 employees starting in 2016.

Unfortunately, this results in school district groups of 51 to 100 employees being pushed out of large consortia and trusts and being forced into the state small group market plan. Moving the 51 to 100 employee groups is expected to result in dramatic increases in premiums for both employees and employers due to the restrictive rating in the small group market, according to an American Academy of Actuaries estimate. Employees in the 51 to 100 group will also face much higher out-of-pocket costs and a much lower level of covered benefits than they currently have. 

This is a particularly worrisome issue in states that require community rating for groups with 50 or fewer employees. Under community rating methodology, the premium for all covered persons and groups must be the same, regardless of age, sex, health status or occupation. School district health plans with 51 to 100 employees participating in consortia would be forced out of affordable and high quality health plans and into the more expensive small group market.

NEA supports allowing states to restore their pre-ACA definition of small employer as an important step toward promoting market stability and avoiding coverage disruptions for education employees and their families. While H.R. 1624 offers a commendable starting place, repeal of section 1304(b)’s small group market size definition is necessary to prevent tremendous health plan cost increases for education employers and employees in the future. Thank you for your consideration of our views on this important issue.

Sincerely,  

Mary Kusler
Director, Government Relations