REPORT: Affordable Care Act to raise premiums for 2/3 of small companies

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by Chris Patterson

WASHINGTON (CNN) -- Republicans are seizing on a new report in which the Obama administration itself concludes that the President's signature health care law would raise premiums for roughly two-thirds of small companies.
 
But Democrats point out that Republicans designed and ordered the report, which they say ignores billions of dollars in subsidies that will decrease those premiums.
 
The report about small business health costs is required by the 2011 Budget and Control Act and came from the Centers on Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services.
 
CMS released the report on Friday with little fanfare. Neither the HHS website nor the CMS website shows a news release or public notice about the report.
 
Republicans, on the other hand, wasted no time publicizing their reactions Monday.
 
"BREAKING: Obama administration says 11 million will pay higher premiums for their health care," read a tweet from House Speaker John Boehner's Twitter account.
 
"This time, the evidence comes from the Administration itself," wrote Rep. Cathy McMorris Rodgers, the fourth-highest-ranking Republican in the House. "After all of the President's promises to lower health care costs... this is just more evidence of his failure to do so."
 
Democrats quickly fired back, arguing that the GOP is taking the information far out of context.
 
"This report is the latest instance of House Republicans attempting to peddle half-truths and incomplete data," Drew Hammill, spokesman for House Democratic Leader Nancy Pelosi, wrote in a statement.
 
"Republicans required by law a cherry-picked report to bolster their false claims on small businesses," Hammill told CNN in an e-mail.
 
HHS disputed Republicans' conclusions from the report, which was produced by the independent office of the CMS Actuary.
 
"Since the Affordable Care Act became law, health care costs have been slowing," HHS spokeswoman Joanne Peters wrote in a statement. "The law is making it easier for businesses to offer coverage"
 
Like most analyses of Obamacare, the new CMS report is not simple, and both sides can find evidence for their arguments.
 
The six-page document looked at companies with fewer than 50 workers that offer employee health benefits, but it calculated health care costs in a hypothetical way - leaving out the impact of government subsidies that are specifically geared for small businesses.
 
Without factoring in government subsidies, CMS concluded that 65% of those small businesses would see an increase in premiums.
 
Why? The report found that those companies had been paying below-average premiums, thanks in large part to having younger and healthier workers. But under Obamacare, neither pre-existing conditions, nor the lack of them, can influence the cost of premiums. So those small companies with healthier workers will see premiums rise to match the average for all workers.
 
"This results in roughly 11 million individuals whose premiums are estimated to be higher as a result of the ACA," the report concluded. Conversely, CMS found companies that have less-healthy workers will now see premiums decrease. That will result in "about 6 million individuals who are estimated to have lower premiums," according to the document.
 
Small businesses were not surprised by the report's findings.
 
"The CMS report isn't terribly surprising from our perspective," said Molly Day with the National Small Business Association.
 
She said that the organization wanted health reform but ultimately opposed the Affordable Care Act because it didn't think the law did enough to contain costs for small businesses.
 
The report is the latest in a long series of attempts to quantify the real-world effects of Obamacare, especially on premiums. But approaches have varied and the data constantly shift as the law goes into effect, making it difficult to draw a definitive bottom line.
 
In general, the Congressional Budget Office has concluded that the Affordable Care Act would not affect or would slightly decrease premiums but that the effect varies widely for different groups.
 

The White House did not respond to CNN's request for comment on the latest report. 

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