While Republican efforts to effectively repeal the Affordable Care Act (ACA) through the budget reconciliation process have garnered attention, Congress's recent passage of a bipartisan bill making targeted changes to the law has received less fanfare. On October 7, 2015, President Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act, a measure that maintains the current definition of small group health plans.  Senator Tim Scott (R-SC) sponsored the Senate version of the bill (S. 1099), with Congressman Brett Guthrie (R-KY) introducing the House version (H.R. 1624). Although narrow in nature, the PACE Act is on the short list of ACA amendments approved by both Congress and the President.

The legislation was aimed at a provision in the ACA, slated to take effect in 2016, that would have expanded the definition of "small group" employers from 2-50 employees to 2-100 employees. The definition of small group versus large group employers is important because certain ACA insurance market reforms do not apply to insurance offered in the large group market. For example, the requirement for a health insurance plan to provide "essential health benefits" does not apply to the large group market. The PACE Act keeps the definition of small employer to between 2 and 50 employees, although states will have the option of expanding the definition.

Companies with between the 51 and 100 employees were expected to face new requirements and higher costs for their health insurance in the absence of the PACE Act change. Had the ACA's original small group expansion provision gone into effect in 2016, employers with between 51-100 employees would have had to comply with strict rating restrictions allowing insurance premium rates to vary based only on age, geographic area, tobacco use, and family size.  Supporters of the legislation were concerned that this would lead to premium increases for small businesses.

In addition, new ACA-mandated benefits requirements for companies with between 51 and 100 employees could have reduced flexibility to adjust cost-sharing and benefits, which could also have affected premiums and prompted more employers to self-insure.  In a statement issued upon enactment of the PACE Act, Sen. Scott said, "This change would have required 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." Senator Scott also cited a recent report finding that if the small group definition had moved to 100, premiums could have increased by approximately 18% for a majority of the mid-sized employers.

The impact of the PACE Act on premiums in the small group health insurance market in individual states remains uncertain because the legislation still leaves room for states to expand the small employer definition.   Even so, the bill was hailed by a coalition of employer associations who had called for its passage. 

Passage of the bipartisan PACE Act has not dimmed Republican opposition to the ACA, with Sen. Scott stating he remains "committed to a full repeal of the health care law." However, the law's enactment may bolster bipartisan plans to make improvements to the law.