The Affordable Care Act’s mandated expansion of the definition of the small group market would limit employers’ health plan options, according to employer groups who are urging the repeal of the mandate before it takes effect in 2016.

Expanding the small group market to include groups up to 100 would not only reduce choice for this segment of the market, it means some employers would be unable to keep the insurer they currently have, according to the Society for Human Resource Management and the National Association of Health Underwriters. The industry groups and more than a dozen other employer organizations are applauding efforts to repeal the ACA mandate through legislation called the Protecting Affordable Coverage for Employees Act (PACE).

The expansion is intended to make insurance more affordable for the smallest employers by expanding the risk pool to include larger companies. It also aims to increase the number of participants in the ACA’s Small Business Health Options Program, also known as the SHOP exchanges.

See also: The three most popular SHOP plans in each state

The PACE bill would maintain the current definition of a small group market as 1-50 employees and give states the flexibility to expand the group size if they feel the market conditions in their state necessitate the change.

“It is in the best interest of employers and their employees that states determine the definition of their small group market,” the groups argue in a recent letter to the bill’s sponsors, Senators Tim Scott (R-SC), Jeanne Shaheen (D-NH), and Michael Bennet (D-CO).

“Repealing the ACA-mandated expansion and returning to the historical role of state determination would allow flexibility and ensure a broad array of coverage options and mitigate dramatic premium increases,” they add.

While national insurers are in virtually every state’s large group market, they are only in a portion of the small group markets, which have numerous administrative requirements for entry, the employer groups say. “Additionally, any carrier that leaves a market faces a five-year moratorium to reenter the state, further eroding competition.”

As a result, the letter says, many groups size 51-100 will find that they cannot keep the insurer they currently have once they are required to buy coverage in the small group market. The PACE legislation would allow these small employers to keep their current plans, the employer groups say.

Expanding the small group market to include all groups with up to 100 employees would also have an immediate impact on premiums due to new rating rules, required essential health benefits, and minimum actuarial value and cost sharing requirements, the groups argue.

“As rates increase, more mid-sized groups may drop coverage or self-insure, resulting in additional rate increases for the small group market – including for those employers with less than 50 employees,” the letter says. “Your legislation allowing states to maintain the existing small group market size will mitigate premium increases and allow employees to keep their existing plans.”

The letter was also signed by the American Hotel & Lodging Association, American Rental Association, American Supply Association, Associated Builders and Contractors Inc., Auto Care Association, Council for Affordable Health Coverage, Healthcare Leadership Council, International Franchise Association, National Association of Home Builders, National Association of Manufacturers, National Association of Wholesaler-Distributors, National Club Association, National Federation of Independent Business, National Restaurant Association, National Retail Federation, Society of American Florists, and the  U.S. Chamber of Commerce.

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