Senators Scott and Shaheen Introduce Legislation to Protect Small Businesses from Potential Healthcare Premium Increases

Measure Allows States to Maintain Current Small Group Markets

April 29, 2015

Washington – U.S. Senators Tim Scott (R-SC) and Jeanne Shaheen (D-NH), both members of the Senate Committee on Small Business and Entrepreneurship, today introduced legislation designed to protect America’s small businesses from potential healthcare premium increases under the Affordable Care Act. 

The Protecting Affordable Coverage for Employees (PACE) Act, S.1099, would allow states to maintain the current small group market definition, which applies to businesses with up to 50 employees, in order to prevent premium increases and disruption for small and mid-sized businesses.

“The PACE Act will ensure that small and mid-sized businesses in South Carolina and across America are not faced with drastic premium increases as a result of the Affordable Care Act,” said Scott, who was a small business owner prior to his election to Congress. “Working together, we can find common sense solutions to stop this major disruption for many mid-sized businesses, their employees and their families.  I would like to thank Senator Shaheen for working with me on this important effort to support small businesses on Main Street.”

“Small businesses are the backbone of New Hampshire’s economy,” said Shaheen. “The PACE Act would make a helpful adjustment to the Affordable Care Act for small and mid-size businesses in the Granite State by maintaining the health care status-quo for employee coverage. I appreciate Senator Scott’s willingness to work on a bipartisan modification to current law that addresses the needs of businesses in New Hampshire and across the country.”   

Under the Affordable Care Act, on January 1, 2016, the definition of the state based small group markets is scheduled to change from 50 to include employers with up to 100 employees. This change would require many small and mid-sized businesses to be subject to different rating rules and requirements, with the potential of increasing the health insurance premiums for small businesses, their employees and their families.   According to an Oliver Wyman report, if the small group definition moves to 100, premiums could increase by approximately 18 percent for a majority of the mid-sized employers.

As a result, many employers may choose to self-insure instead of remain in the small group market because those employers will no longer be subject to the various requirements of the small group market.  This could further increase the premiums for those left in the newly expanded risk pool.

The PACE Act is backed by nearly twenty groups representing small and mid-sized businesses, including the U.S. Chamber of Commerce, the National Retail Federation and the National Federation of Independent Business, and has bipartisan support from right- and left-leaning thought leaders, state regulators, and health policy experts.

Last month, Congressmen Brett Guthrie (R-KY) and Tony Cárdenas (D-CA) led a bipartisan group of lawmakers in introducing the PACE Act in the U.S. House of Representatives.