by Brenée Goforth
Communications Associate, John Locke Foundation
Carolina Journal’s Julie Havlak reported on a legislative push to promote affordable health insurance coverage for small businesses. According to Havlak:
Senate Bill 86, which passed Wednesday, Aug. 7, would broaden access to association health plans, allowing small businesses to band together when negotiating with insurers and deciding on health coverage. It’s a controversial solution. The bill’s sponsors sold it as a way to liberate small businesses from crushing costs, but critics in the House argued it would weaken Obamacare, drive up premiums in the small group market, and provide substandard coverage.
According to Havlak, the bill takes advantage of the framework set by the Affordable Care Act:
The ACA broke the health insurance market into two segments: small group market, for employers with two to 50 employees, and large group markets, for employers with more than 50 employees.
Havlak reports this has caused issues for small businesses:
Small businesses complain shopping on the small group market drives their premiums sky-high, as it limits their bargaining power and adds extra regulations.
They look to association health plans as a solution. Under these plans, they could get into the large group market using the umbrella of an association, where they could bargain with insurance companies as a collective rather than as individuals.
Opponents of the bill claim it would lower the quality of coverage these small businesses provide. Havlak explains:
Once employers move up to the large group market, regulations requiring them to cover those essential benefits lift. Large-group employers aren’t required to cover emergency services, hospitalization, prescription drugs, laboratory services, maternity and newborn care, pediatric services, ambulatory patient services, mental health and substance use disorder services, rehabilitative and habilitative services and devices, and preventive and wellness services.
However, this concern may be less likely than many believe. Havlak writes:
It’s likely, however, that association health plans will cover most of the essential 10 benefits, says Jordan Roberts, John Locke Foundation health-care policy analyst.
“They can get the same plans, but it’s a lot cheaper because of administrative efficiencies and because they can use their bargaining power to get lower rates,” Jordan Roberts said. “They just get treated as a large group instead of a small one or an individual.”