Small businesses win with new health care options
For Kalena Bruce, a fifth-generation cattle farmer in Stockton, finding affordable health coverage under Obamacare hasn’t been easy. She’s a young mom and business owner paying $700 a month in premiums alone, not to mention deductibles and copays.
That’s why she’s become an advocate for association health plans (AHPs), which allow small businesses to band together, like a larger employer, to leverage their size to negotiate lower prices and better options from insurance companies. Allowing small businesses to join with other businesses to create an economy of scale increases their bargaining power, lowers administrative costs and mitigates risk.
The idea has worked for Missouri small businesses for more than a decade. The Missouri Association of Manufacturers formed a plan similar to an AHP with 32 companies in 2006, allowing six of those companies to offer coverage to their employees for the first time. A second plan formed in 2010 lowered premium costs by 60 percent, according to the organization. At the end of last year, the Missouri Chamber of Commerce created an AHP and is already offering insurance to about 5,000 people.
Fortunately, the Trump administration took action to make quality health care more affordable in Missouri and nationwide by issuing a new rule expanding AHPs. According to the Congressional Budget Office, an estimated four million Americans, including 400,000 who would not otherwise be insured, are expected to enroll in AHPs under the new rule.
Expanding AHPs is a simple solution to a big problem. The number of small employers offering health coverage dropped by 25 percent between 2010 and 2017. At the same time, premiums on the Obamacare exchanges have skyrocketed. That’s especially challenging for sole proprietors, who make up about 85 percent of the 30 million small business owners in our country. Family farmers, for example, might not qualify for subsidies on the Obamacare exchanges if they’re making $70,000 a year. However, they may be paying $20,000 or more in premiums and deductibles for a family of four.
The new rule will expand access to quality, affordable coverage by allowing more employers to form AHPs. The rule opens the plans up to sole proprietors and broadens the criteria under which AHPs can be formed. Employers are now able to form AHPs by city, county, state or multi-state metropolitan areas, as well as form them across state lines based on their specific industry.
The administration’s rule also provides small businesses the same regulatory relief Obamacare gave large employers. Large companies that self-insure are not bound by the law’s benefit mandates and rating restrictions. Under the new rule, small businesses will be treated the same way. There will still be protections for pre-existing conditions, companies cannot cancel plans because you get sick, and the plans are prohibited from imposing annual or lifetime limits on benefit coverage.
More than one million Missourians, or nearly 50 percent of our state’s private workforce, were employed by small businesses in 2015, according to a recent study by the Small Business Administration. Providing more options for affordable coverage isn’t just good for families, it also will free up capital to reinvest and grow their businesses. The stronger Main Street businesses are, the stronger our entire economy and every community will be.