On Wednesday evening, President Obama signed into law H.R. 1624, the Protecting Affordable Coverage for Employees (PACE) Act, legislation that will give states the ability to define the size of a small group for health insurance purposes. This legislation included an extraordinary effort beginning last winter on its way to being passed on a voice vote by the House on September 28 and through unanimous consent by the Senate on October 1. This accomplishment would not have been possible without the support of Representatives Brett Guthrie (R-KY-2) and Tony Cardenas (D-CA-29) and 233 other bipartisan co-sponsors in the House, Senators Tim Scott (R-SC) and Jeanne Shaheen (D-NH) and 47 other co-sponsors in the Senate, and our members who collectively sent more than 21,000 messages to Congress on this issue asking for their support. If you haven’t already, we encourage you to send a message to your legislators, if they were among these co-sponsors, thanking them for their support and leadership on this issue.
The law repeals the mandated small group expansion from groups of up to 50 employees to groups of up to 100 employees that was to go into effect on January 1, 2016. This law gives states the flexibility to determine the size of their small group market instead of being forced into the national standard. NAHU has long been concerned that the combination of the new compliance requirements and the regulations for the new group size would cause dramatic change to the insurance policies of medium-sized employers, and we have continued to advocate for the enactment of the PACE Act to prevent this type of market disruption. However, it is important to note that this change does not repeal the employer shared responsibility, employer reporting, or other compliance requirements for groups over 50 employees.
NAHU is now shifting our focus to the states as they work to implement this new law. As stated above, the PACE Act defines small groups as those with up to 50 full-time equivalents; however, states now have the ability to set their own definition of small group as long as the definition is no less than 50 and no more than 100. Some states took action early and have already passed legislation that mirrored the ACA and expanded the definition of small group to groups of up to 100 effective January 1, 2016. Those states will expand to 100 unless action is taken to pass legislation to define small group as up to 50. For the majority of states that took no action regarding the definition of small group within their borders, we await confirmation from the departments of insurance and legislatures as to whether the states will accept the new federal standard or if they will take action of their own to expand the definition of small group of up to 100.
The process to address this issue began last winter, when we identified the disruption that the expansion could create to the small and medium-size employer group market. We then met with Administration officials and asked for a delay of the expansion of the small group market and in February, we sent a letter to the Administration formally asking for the delay. To augment our work with the Administration, we brought together a half dozen senators (Heitkamp, Coons, Manchin, King, Donnelly, Tester, and McCaskill) to send a letter on March 12 to the Administration asking for a delay. An Operation Shout followed this on March 16 and more than 5,300 messages were delivered to Congress.
By late March, it became clear that the Administration would not be delaying the transition, so we put together the 51-100 Coalition, an organization made up of carrier and business groups. We then ramped up our legislative push and met with all of the members of the Senate Finance Committee and House Energy and Commerce Committee to let them know of the coming problem. Following this meeting, we met with Congressmen Guthrie and Cardenas and discussed with them the small group definition issue. Subsequently, the congressmen introduced a bipartisan bill together in the House on March 25. We then engaged with Senators Scott and Shaheen, who later introduced a bill on April 27. We followed up these bills with an Operation Shout on April 30, which has since produced more than 11,000 messages to Congress asking for co-sponsorship on the bills.
Throughout the spring and summer, we connected with both House and Senate staff to get co-sponsors on both bills that were representative of every part of the political spectrum to help spread our message of the importance of this problem. Our supporters included over half the House chamber and just under half of the chamber in the Senate. During the summer, NAHU met with leadership in the House and Senate to ask them to pass their respective bills, and the Energy and Commerce Committee staff in both parties to prepare them for a hearing on the legislation. On September 9, the House Energy and Commerce Health Subcommittee held a hearing on H.R. 1624.
Just before the August recess, we worked with the Senate Democrats to run a hotline on the Democratic side to ensure that all of the senators were agreeable with the bill. When Congress reconvened in September, we worked with House leadership to ensure that the estimated $400 million in savings created by the bill could be used by the Republican leadership. With the savings issue resolved, the House scheduled a floor vote for H.R. 1624 on September 28. NAHU sent an Operation Shout before the vote in the House to ensure a success vote, generating 2,221 messages sent to Congress. The bill was passed on a voice vote, after which we encouraged the Republican leadership Senate to take the legislation. On September 29, the Republican agreed to run a hotline on their side to see if any Republican objected and on October 1 the Senate leadership passed the bill by unanimous consent.