PITTSBURGH (TNS) — Small business owners stung by escalating employee health insurance costs could find relief in an old idea that’s getting new attention.
Association health plans — which group similar businesses together to get a break on employee health insurance — have been around for years, but they got a new look in 2018 with Trump-era regulatory changes that eased plan criteria. Codifying association criteria in state law could save small business owners up to 30% in health insurance costs, said Jezeree Friend, assistant vice president of external relations at the Manufacturer & Business Association, an Erie-based trade group.
“It comes down to helping small businesses,” Friend said. “These small businesses are getting squeezed.”
A 2019 report by the Congressional Budget Office and Joint Committee on Taxation concluded that association health plans could enroll 500,000 uninsured people through 2028 with an average 30% reduction in small employer premiums.
A roundtable discussion this week was sponsored by Americans for Prosperity PA, a libertarian conservative political advocacy group based in Arlington, Va. Panel speaker state Rep. Valerie Gaydos, a Republican from Sewickley, sponsored a bill in March to expand the definition of association health plans, but it has been stalled in committee since then.
In Gaydos’ bill, health insurance offered through business associations would meet the group market coverage requirements of the Affordable Care Act — including the prohibition against denying coverage based on a pre-existing medical condition — and provide the ACA’s essential health benefits. Vaccines and women’s reproductive care and various wellness initiatives are among the ACA’s required benefits.
Associated health plans cost less than ACA individual plans because they limit the group’s claims experience rating pool to the covered employees rather than the much larger pool used by private insurers and Pennie, Pennsylvania’s ACA member marketplace.
Overhead costs, such as administrative expenses, are also lower in associated health plans than for Pennie or private insurers, said Rick Galardini, a panelist and senior vice president of employee benefits adviser My Benefit Advisor, which has offices in Pine.
Moreover, some of the ACA essential benefits have been little used by those insured, he said, even though they increase premiums.
In recent years, small group rates from private insurers averaged between 3% and 5% increases, but carriers were seeking state Insurance Department approval for an average 7.1% increase for 2023, Galardini said.
San Francisco-based Kaiser Family Foundation said the average premium for employer-sponsored family health coverage was $22,221 in 2021, up 4% from the previous year. Workers contributed an average $5,969 toward coverage.
But the U.S. Department of Labor’s final rule on association health plans was deemed unlawful in a 2019 lawsuit filed by state attorney generals, including Pennsylvania’sJosh Shapiro, leaving the future of the revision in doubt. Former President Donald Trump appealed the decision to the U.S. Court of Appeals for the D.C. Circuit, where the case has since stalled.
“Until the Department of Labor actually rescinds the problematic AHP regulation, we’ll continue to see a lot of confusion,” Mila Kofman, executive director of the D.C. Health Benefit Exchange Authority, told Bloomberg Law in March.
Cost savings aside, association health plan critics say the plans are not a good choice because they are free to limit health benefits and don’t have the ACA’s consumer protections.
“They’re not a good option for people with health issues because you’re not buying coverage with the same rating rules,” said Justin Giovannelli, associate research professor at the Georgetown Center on Health Insurance Reforms in Washington, D.C., who was not at the event in Coraopolis. “It’s generally good to be suspicious of mysterious claims about administrative and other savings. Everybody is sick sometimes.”
Gaydos, a former small business owner, said lower health insurance costs would make it easier for employers to find workers by increasing wages. In addition, the state Insurance Department has not been receptive to creating the broad, legal framework that association health plans to eliminate ambiguity, she said.
“The challenge is getting it through committee,” she said about her legislation, House Bill 555. “We’re killing the lifeblood of the country by not giving small businesses this opportunity.”
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