Mandates Force D.C. Small Businesses into Government Healthcare Exchange

Mandates Force D.C. Small Businesses into Government Healthcare Exchange

House Oversight Committee members Chairman Darrell Issa, (R-CA), James Lankford (R-OK), and Jim Jordan (R-OH) sent a letter to Health and Human Services Secretary Kathleen Sebelius asking for further information about Obamacare implementation in regards to the recent “small business mandates.” 

These small mandates limit the ability of small businesses to buy competitive insurance plans for their employees. The White House explanation appears to fly in the face of the actions already taken in Washington, D.C. and Vermont:

The law specifically exempts all firms that have fewer than 50 employees – 96 percent of all firms in the United States or 5.8 million out of 6 million total firms – from any employer responsibility requirements. These 5.8 million firms employ nearly 34 million workers. More than 96 percent of firms with 50 or more employees already offer health insurance to their workers. Less than 0.2 percent of all firms (about 10,000 out of 6 million) may face employer responsibility requirements. Many firms that do not currently offer coverage will be more likely to do so because of lower premiums and wider choices in the Exchange. 

The District of Columbia and Vermont particularly appear to be going against measures in the health care law when it comes to small businesses and the mandate, the Committee found. Both D.C. and Vermont passed small business mandates requiring organizations of 50 individuals or fewer to purchase health insurance through state exchanges established under Obamacare. These mandates contradict the health care law, which states qualified employers will not be prevented from selecting health plans offered outside of an exchange. 

According to the letter, almost one year after the D.C. Council approved a final bill establishing the D.C. Health Benefit Exchange in December of 2011, seven new members of the D.C. Exchange Authority Board were sworn in by D.C. Mayor Vincent Gray to begin the implementation process. These individuals eventually put forth and moved forward on a proposal in October of 2012 requiring all organizations with 50 or fewer members within the District to purchase coverage through the “Exchange.”

The mandate requires all small businesses and individuals not offering health insurance coverage by December 31, 2013, to buy such coverage exclusively through the Exchange. If a small business already offers health insurance coverage, it will be required to purchase coverage through the exchange beginning in 2015. The D.C. City Council tentatively approved the board’s proposal in early June.

It is unclear as to how these deadlines will be effected considering the administration announced on Tuesday it would delay the employer mandate until after the 2014 midterm elections. Breitbart News reached out to HHS Public Affairs for comment but received no response.

D.C. Councilman David Catania explained, “By merging the two markets [small business and individual], the Exchange will have sufficient volume and power of aggregation, which will decrease insurance costs for individuals…” In 2016, according to the letter, the definition of a small business in D.C. will increase to include those with 100 employees. 

“They claim that D.C. is too small an insurance market, such that people are allowed to buy on or off the exchanges that the exchanges won’t work. Now I think it shows the problems of Obamacare to rely on coercion to drag people on to these exchanges to get the exchanges to work,” the Heritage Foundation’s Chris Jacobs told Breitbart News. Jacobs points out it will be any small business in Washington D.C. that will be targeted. “Any small business with a health insurance plan, you cannot buy them on the private market. You can only buy them through the exchange,” he said. 

Oversight Committee members argue in their letter, “[T]he District’s proposal to force individuals and small businesses onto its Exchange is inconsistent with principles of consumer choice and competition, which are vital to a well functioning health insurance market.”

Over 150 small businesses and organizations in D.C. wrote a letter to the Chair of the D.C. Exchange Authority Board expressing their protestations, saying they “do not want to be forced to buy the government standardized cookie cutter coverage that would be run through a government run exchange.” 

The Center for Association Leadership noted that small businesses will not have enough time to figure out the extent of the higher costs and how the costs will affect their businesses. Additionally, they also will not know whether the health insurance plans can meet the grandfathering criteria in order to be exempted from D.C.’s proposal.