Association Health Plans Will Destabilize Small Group Market
Statement by Small Business Majority Founder & CEO John Arensmeyer on why the U.S. Department of Labor’s new rule allowing for association health plans will be bad for small firms
We are disappointed and disturbed that the U.S. Department of Labor released a final rule today authorizing the expansion of association health plans (AHPs) over the objections of virtually everyone who weighed in on the proposed rule, including small businesses. This is yet more evidence that this administration will do all it can to undermine the Affordable Care Act (ACA) regardless of the consequences. The new rule will allow groups of businesses to band together to buy insurance across state lines, which will be bad for small firms and their employees because it will lead to higher premiums, unbalanced risk pools and lower-quality insurance.
While the new rule may make it easier for a select number of small businesses with younger and/or healthier employees to purchase association health plans that might be cheaper in other states, the tradeoff is that this will cause the insurance market for small businesses to split in two, leading to major spikes in premiums for small firms that remain in the small group market.
What’s more, these multi-state plans will offer fewer consumer safeguards. In fact, they will not have to include protections for people with pre-existing conditions nor will they be required to cover things like maternity care because they will not be subject to certain rules established by the ACA.
The AHP rule is also redundant because small businesses are already allowed to work together to purchase health insurance. That system is called the small group market, and the more people we have in this pool, the lower premiums will be for its participants. Encouraging people to leave the small group market, however, will only harm small businesses by raising their premiums.
This administration has shown that it will do anything and everything possible to destroy policies it disagrees with, regardless of whether or not those policies are working for small businesses. It is simply fact that the ACA has helped millions of small business owners, their employees and solo entrepreneurs gain quality, affordable health insurance. Since the administration has no interest in improving healthcare for small firms, we implore states to do all they can to strengthen ACA marketplaces so that insurance remains affordable for America’s job creators.
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.