Short-Term Insurance Plans Will Undermine ACA Marketplaces Small Businesses Rely On
Statement by Small Business Majority Founder & CEO John Arensmeyer on why the U.S. Department of Health and Human Services’ new rule expanding the duration of short-term health insurance plans will increase costs for small firms
We are disappointed that the U.S. Department of Health and Human Services released a final rule today authorizing the expansion of short-term insurance plans from their current three months to 364 days, as well as allowing insurance companies to renew these plans for up to a whopping three years. This change will undoubtedly pull many healthy people away from the Affordable Care Act (ACA) marketplaces, and that is very bad news for the millions of small businesses, small business employees and solo entrepreneurs that depend on the marketplaces for quality, affordable insurance.
Short-term health insurance is meant to fill a gap in an individual’s coverage in the instance of job loss or other life changes. These plans are not required to cover essential health benefits like prescription coverage or mental health treatment and can come with hefty deductibles, which is why they are inexpensive. The Trump administration estimated as many as 1.6 million people will purchase short-term plans by 2022, nearly all of whom will be younger and/or healthier. This will create an unbalanced risk pool that disrupts the individual marketplace and raises costs for everyone else who remains in those marketplaces.
If the administration’s prediction comes to pass, it will devastate small firms. More than 3.7 million small business employees are enrolled in the ACA marketplaces nationwide, and more than 6 in 10 ACA marketplace enrollees are small business owners, self-employed or small business employees. Without healthy people in the marketplace to offset the costs insurance companies incur to care for older or sicker people, premiums will rise drastically and many small businesses will be priced out of the market. Sadly, premiums are already on the rise thanks to other actions by the Trump administration, and today’s rule will only make matters far worse.
Once again, this administration chose political priorities over America’s job creators, and this will likely not be the last time. There is no question the U.S. economy is booming right now, but if small businesses can’t afford to keep their workers healthy, how productive can these firms possibly be? If the economy does experience a downtown in the near future, the administration’s attempts to destabilize the ACA will be partly to blame.
About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of a thriving and inclusive economy. We actively engage our network of more than 58,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.