by Jordan Roberts
Director of Government Affairs, John Locke Foundation
It’s no secret that many individuals and small businesses struggle to afford health insurance. One result of the Affordable Care Act (ACA) was the regulations placed on small business and individual insurance inflated the prices of plans significantly.
Association health plans (AHP) are one way to combat this trend for individuals and small businesses. AHPs allow groups of individuals or small businesses to band together and purchase insurance through a trade association. This solution allows for greater choices of plans at a much lower price.
However, a handful of Democratic-led states have done everything in their power to stop individuals who can’t afford ACA plans from purchasing more affordable health insurance. A legal challenge to the Trump rule allowing for the more flexible use of AHPs has halted the further use of these plans even though they were already providing for real people who struggle to afford health insurance.
Michigan was one of the first states to allow the sale of these insurance plans. Read part of an op-ed from Scott Lyon, the senior vice president of the Small Business Association of Michigan, as he explains what a devastating impact this legal challenge has on Americans:
I have been working in employee benefits for more than 35 years. Each year, small business owners and sole proprietors ask me, “How can we band together with other small businesses and sole proprietors in our community to group-purchase our health insurance?” Group-purchasing does two things: gives small businesses/sole proprietors options they didn’t have before, while giving them additional skin in the game.
This year, the Small Business Association of Michigan set out to fix this problem for our members. SBAM partnered with MichBusiness to form an association health plan, which we called TranscendAHP. TranscendAHP allows small businesses and sole proprietors throughout Michigan to band together to purchase health insurance in the same manner that large employers do.
To say TranscendAHP has been successful is an understatement. Virtually every small business and sole proprietor who joined was able to find a health insurance option that was 20-30% more affordable than the health insurance plan they had last year.
Many of these small businesses now have a health plan with a lower deductible that covers more health benefits and services, yet still costs less than what they were previously paying. And some small businesses and sole proprietors are now covered by health insurance for the first time.
The health plans offered by TranscendAHP come from Blue Cross Blue Shield of Michigan and Blue Care Network and are all fully insured. The plans also voluntarily cover all 10 of the Affordable Care Act’s essential health benefits, and instead of covering pediatric dental and vision services through the insurance contract itself, we offer coverage for these services through stand-alone products.
Transcend is the largest association health plan of its type in the country with more than 440 small businesses and 215 sole proprietors obtaining coverage. These plans do not cut any corners or leave anything out. Transcend simply gave small businesses and sole proprietors the opportunity to buy the same plans that large businesses offer to their employees — through group-purchasing.
John Locke and Locker Room readers will remember that the NCGA passed a bill allowing AHPs to be sold in NC. However, the lawsuit mentioned above is preventing North Carolinians from signing up for a more affordable health care plan for 2020.
Hopefully, the Trump administration will win their appeal and AHPs are allowed to be sold so that individuals who can’t afford insurance or struggle to afford insurance will have more options than what the ACA offers.