The ACA Fix for Mom & Pop
The Affordable Care Act was supposed to be a boon to small businesses and the 59 million Americans they employ. It hasn't worked out that way.
In the past few years the ACA outlawed basic insurance plans and required businesses with 50 or more full-time workers to provide gold-plated coverage they didn't need. Almost immediately, companies began restructuring payrolls, converting full-time employees to part-time. Some took away insurance from workers who were previously covered. Walmart discontinued health care for 30,000 employees for this reason.
Suddenly, small businesses had an incentive to avoid creating jobs. Companies exempt from the employer mandate didn't dare hire a 50th employee. Many business owners say they didn't bid on jobs because winning the contract would mean hiring more employees and the insurance cost would have wiped out the earnings.
Meanwhile Insurance Premiums Soared
The average annual employer-sponsored health plan for a family now costs nearly $19,000—roughly a 20% increase since 2012. The cost of covering single employees is nearly $7,000 a year. It's no wonder that the number of small firms that cover their workers has decreased by a third since 2008.
Unlike large corporations - which can self-insure or buy coverage in the large-group market - many small businesses are trapped. According to Kaiser, the cost of the cheapest bronze plan rose 17% in 2018. The silver plan jumped 32%. In some states the increases are even higher.
The answer to these out-of-control costs is to repeal the ACA. Differences on how to do this continue.A rule the Labor Department is expected to unveil shortly would greatly expand Association Health Pans (AHP).
AHPs allow small businesses and their employees to buy health insurance through large purchasing groups, creating the same efficiencies that allow big corporations to negotiate lower rates. Through AHPs, small businesses can spread risk and share costs and also shop across state lines, creating a truly national market.
The plan has critics; some states are opposed. Most regulate their insurance markets even more heavily than the ACA does. They know that businesses will jump at the chance for lower premiums. The big insurance carriers, which now enjoy protected markets because of state regulations, would have to compete on cost and quality. They'll try to scare Americans by warning of fraud. But AHPs would be regulated by the Labor Department like other employee benefits plans.
The current system can't be defended. Small-businesses owners need affordable health care, and they want their employees to have it, too. There's no reason their choices should be limited by arbitrary rules or political turf battles.
The consensus is that association health plans will disrupt the marketplace in exactly the right way … by creating more competition, more choices and lower costs.