Obama Signs PACE Act

Date: October 09, 2015

Measure Will Prevent Obamacare Premium Increases For Many Small Businesses

Wednesday evening, President Obama signed a measure to “prevent health insurance premiums for 3 million people from going up next year,” USA Today reported. The Protecting Affordable Coverage for Employees Act was “passed by both chambers without a single no vote and signed by the president with no controversy or fanfare.” The measure enables states “to decide how to classify businesses of 51 to 100 employees, potentially saving premiums for small business employees from going up 18 percent or more,” according to an industry estimate. USA Today reported that by decreasing workers’ premiums, these workers will have higher “taxable income, resulting in a $280 million in additional revenues to the federal government over 10 years” that will be used “to bolster Medicaid.” Commenting on Obamacare as a whole, PACE Act sponsor Rep. Brett Guthrie (R-KY) said, “I’m for repeal and replace. But here’s the situation: You have people being negatively affected, and so can we find a way to work together to fix it. Sometimes it’s not about who has the biggest lobbying firm. It’s when you have grassroots people who say they’re being negatively affected. … And this affects businesses every congressional district in the country.” The Memphis (TN) Business Journal reported that “according to Tim Finnell, president of Memphis-based Group Benefits, Tennessee is one of the states expected to keep the definition at 50 employees or less.”

What This Means For Small Businesses

Some states may choose to expand the definition of small businesses under Obamacare, meaning small business owners in certain areas could still see steep cost increases in health coverage for employees. However, passsage of the PACE Act provides a welcome reprieve for many small businesses and their employees, who were faced with potentially high costs for health coverage in 2016. The Pittsburgh Post-Gazette reported that the change means about 160,000 employers and their workers will face a reprieve from health insurance premiums that could have risen by “50 percent or higher in some cases, in part because they would be in a smaller risk pool.” According to University of Pittsburgh Small Business Development Center Raymond Vargo, some small business owners “now may be more willing to add to their workforce.” He explained, “It gives small business entrepreneurs — the ones who create the most jobs — the flexibility to grow their business.”

Additional Reading

The Business Journals, The Hill, the New Hampshire Union Leader, the Concord (NH) Monitor, and the Washington Examiner also covered the president’s signing of the PACE Act.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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