The Obamacare ‘Fix’ Most Likely To Pass This Congress

There are rumblings that legislation changing the law’s small-group market rules could move.

President Obama and Senate Majority Leader Mitch McConnell could find some common ground on Obamacare.
MANDEL NGAN/AFP/Getty Images
Aug. 31, 2015, 5 a.m.

Le­gis­la­tion over­turn­ing the Af­ford­able Care Act’s ex­pan­sion of the small-group in­sur­ance mar­ket is likely to get a look this fall, ac­cord­ing to mul­tiple sources on and off Cap­it­ol Hill, and it may be the Obama­care “fix” with the best chance of be­com­ing law.

All the usu­al caveats ap­ply: Re­pub­lic­ans would have to con­vince the rank-and-file to ac­cept a smal­ler-scale change to the law while wait­ing for full re­peal. Demo­crats must be will­ing to agree to any change at all. Noth­ing in­volving Obama­care comes easy.

But of all the “fix” bills float­ing around the Cap­it­ol, the small-group pro­vi­sion might have the most work­ing in its fa­vor: It has bi­par­tis­an sup­port, costs little to noth­ing to change, and even some Obama­care sup­port­ers say the law could func­tion fine with the al­ter­a­tion.

There is also a loom­ing dead­line, as the ACA’s man­date that states in­crease the defin­i­tion of their small-group mar­ket from em­ploy­ers with 50 or few­er em­ploy­ees to 100 or few­er will start to take ef­fect in some states on Jan. 1. Bills in the House and the Sen­ate would nix that re­quire­ment, in­stead leav­ing the defin­i­tion at the his­tor­ic­al norm of 50 while al­low­ing states to set it high­er if they choose.

Mul­tiple sources said Sen­ate Re­pub­lic­an lead­er­ship has be­gun tak­ing its caucus’s tem­per­at­ure on the meas­ure for ac­tion in the fall. Noth­ing has been set yet, however. “The Lead­er hasn’t made any schedul­ing an­nounce­ments on that,” Don Stew­art, a spokes­man for Sen­ate Ma­jor­ity Lead­er Mitch Mc­Con­nell, said in an email.

The Sen­ate bill, in­tro­duced by Re­pub­lic­an Sen. Tim Scott and Demo­crat­ic Sen. Jeanne Shaheen, has 27 co­spon­sors, in­clud­ing prom­in­ent mem­bers such as Sen­ate Fin­ance Chair­man Or­rin Hatch and the No. 3 Demo­crat, Sen. Chuck Schu­mer. The House’s ver­sion, in­tro­duced by GOP Rep. Brett Gu­thrie, has 207 co­spon­sors. Six Demo­crats have signed onto the Sen­ate’s bill, enough to over­come a fili­buster if all the Re­pub­lic­ans are also on board, and 39 have joined the House’s.

“It is prob­ably one of the most real­ist­ic changes at this point that we can see,” said Katie Ma­honey, the U.S. Cham­ber of Com­merce’s ex­ec­ut­ive dir­ect­or for health policy. The Cham­ber has formed a co­ali­tion with oth­er big lob­by­ing groups, such as the Na­tion­al Res­taur­ant As­so­ci­ation and the Na­tion­al As­so­ci­ation of Man­u­fac­tur­ers, to push for the change. The Cham­ber is ex­plor­ing me­dia buys to con­tin­ue el­ev­at­ing the is­sue in the fall.

If the meas­ure clears Con­gress with sub­stan­tial ma­jor­it­ies, many think Pres­id­ent Obama would be amen­able to this kind of change to his sig­na­ture law. His ad­min­is­tra­tion has re­peatedly said that it is open to tweaks, with the pres­id­ent him­self say­ing, “let’s fig­ure out how to make it bet­ter.”

“It just strikes me that this is pretty much a no-brain­er,” said Tim Jost, a health law pro­fess­or at Wash­ing­ton and Lee Uni­versity who gen­er­ally sup­ports Obama­care. “I’d be very sur­prised if the pres­id­ent would veto this un­less it comes glommed up with all kinds of oth­er stuff.”

So, if ax­ing the 100-em­ploy­ee defin­i­tion is a no-brain­er, why was it in­cluded in the law in the first place? Jost said the mo­tiv­a­tion was to im­prove the small-group, 50-and-un­der mar­ket, which has his­tor­ic­ally had more volat­ile costs. By adding busi­nesses with up to 100 em­ploy­ees, the think­ing was it would make the mar­ket more stable and more at­tract­ive to in­surers.

But a few prob­lems would likely arise, Jost said. First, while prices might go down for the 50-and-un­der busi­nesses as their mar­ket grew, the 51-to-100 busi­nesses would al­most cer­tainly see their prices go up. They would be mov­ing from the more stable and typ­ic­ally less ex­pens­ive large-group plans to the small-group set­ting. The small-group mar­ket is also sub­ject to some Obama­care rules, such as cov­er­ing cer­tain es­sen­tial health be­ne­fits, that the large-group mar­ket is not. Some es­tim­ates have pro­jec­ted that costs would ac­tu­ally in­crease for every­body.

Second, many of those same em­ploy­ers could lose their cur­rent plans be­cause their in­surer doesn’t op­er­ate in the small-group mar­ket. Jost said he would ex­pect “a big dis­rup­tion” if the change took ef­fect, one made par­tic­u­larly acute by the con­tro­versy over people los­ing their health plans in 2013 be­fore Obama­care’s in­sur­ance mar­ket­places opened.

Lastly, for the reas­ons above, busi­nesses with young­er and health­i­er work­forces might then de­cide to switch to self-in­sur­ance. That’s already a risk for Obama­care more gen­er­ally, be­cause it would ad­versely af­fect the mar­ket if it happened on a broad scale, and the chan­ging small-group defin­i­tion ex­acer­bates that risk.

“You may just have healthy groups ex­it­ing the mar­ket al­to­geth­er,” Jost said.

But even giv­en all that, it’s far from cer­tain that the ‘fix’ will be en­acted. The biggest ques­tion is wheth­er the Re­pub­lic­an caucuses as a whole will ac­cept it, without at­tach­ing any pois­on pills that would make it un­ten­able for Demo­crats and Obama.

One lob­by­ist ad­voc­at­ing for the le­gis­la­tion ar­gued that it should be an easy sell to con­ser­vat­ives: It re­peals an Obama­care pro­vi­sion, would pre­vent some people from los­ing their cur­rent health cov­er­age, and re­turns power to the states. But for at least a hand­ful of Re­pub­lic­ans, any­thing less than full ACA re­peal is tan­tamount to sur­render. To ad­vance the meas­ure, con­gres­sion­al lead­ers will need to keep that sen­ti­ment con­tained to a small minor­ity of far-right con­ser­vat­ives.

There are also sure to be some Obama­care sup­port­ers who won’t go along with the change. Sen­ate Minor­ity Whip Dick Durbin, an Illinois Demo­crat, was a pro­ponent of in­creas­ing the small-group mar­ket back in 2009. Small Busi­ness Ma­jor­ity, a pro-ACA group that has of­ten served as a coun­ter­weight to the Cham­ber and the Na­tion­al Fed­er­a­tion of In­de­pend­ent Busi­nesses, would op­pose the bills, ac­cord­ing to its pres­id­ent, John Arens­mey­er.

He ar­gued that the law’s op­pon­ents have been wrong be­fore about al­leged ill ef­fects that the ACA would have, and he thought they would be wrong again about the neg­at­ive im­pact for some em­ploy­ers if the new small-group defin­i­tion were im­ple­men­ted.

“We feel that ul­ti­mately there needs to be a lar­ger pool, that’s go­ing to be a stronger pool, more com­pan­ies in it, more lives in it. Right now, small busi­nesses be­low 50 are be­ing dis­ad­vant­aged by the fact that the mar­ket above 50 doesn’t have to play by the same rules,” he said. “Pretty much con­sist­ently to date, all of the voices of doom and gloom, the Chick­en Little voices out there, have been proved wrong.”

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