Small business affordable health insurance coming?
This is National Small Business Week, and the Main Street half of our economy is on the rise. After years of persistent pessimism, marked by an economically dangerous downturn in business dynamism, small-business owners are once again feeling optimistic, taking productive risks and creating new jobs. This is important for our economy, but can it last, as entrepreneurs’ health insurance premiums are once again on the verge of double-digit increases?
Small-business owners’ outlook has changed in recent months because they feel heard. Policies coming out of Washington, D.C. are addressing two of their biggest ongoing concerns: taxes and regulations. They’ve always told Washington that “less is more” on those issues, and finally their leaders have responded: with historic tax reform that included the lower individuals rates entrepreneurs needed, and with regulatory relief across the federal agencies.
But there have always been three legs to the small-business stool of sentiment. The third leg is the cost of health insurance – an expense so crippling (exacerbated by Obamacare’s requirements and limited choices), it impacts everything from wages to the cost of goods and services and even forces some entrepreneurs to ask whether it is worth it to be insured, or to be in business at all.
Somewhat ironically, relief on the health insurance front may come from a new regulation – one from the U.S. Department of Labor that would allow the creation of association health plans. These plans would enable small businesses to access more affordable insurance plans by allowing them to join together in a way that broadens their risk pool while also, hopefully, exempting them from some of the expensive rules that are unevenly applied in the current, deeply flawed health insurance marketplace.
A draft rule has been written, and it could be a game changer if it is finalized in a way that really opens doors and doesn’t draw too many restrictive lines around new plans.
For example, the draft rule currently limits which businesses can join together to form an association for health insurance. The way the rule is written, only businesses sharing an industry-specific “commonality” could start an association health plan. In other words, local restaurants could join together, but they wouldn’t be able to include local plumbers or landscapers. This guideline is arbitrary and should be modified to allow any small, independent business to join an association and access competitive, affordable health insurance.
The draft rule also fails to treat small-business associations in a way that would allow them to create a national group, insuring owners and employees across the country. This distinction is important because it would simplify the regulations around small-business health insurance and create a more level playing field with corporate America. Big, national employers are currently subject to only one set of health insurance regulations (federal), while small firms’ plans are regulated at both the federal and state level (this is one of many reasons why individual and small group plans are so much more expensive than corporate plans).
If the Labor Department’s final regulation is done right, small-business optimism will continue and may increase even more. The hope of accessing affordable health insurance will be a literal dream come true for small business – a sector that has traditionally offered unique opportunity to economically disadvantaged and minority groups, especially Hispanics.
A well-written, effective rule can also protect Republicans from the political backlash that could come from increasing premiums. News of skyrocketing 2019 health insurance costs this the fall will feel like a punishing tax to the small-business sector.
The small-business community votes, and they are watching health-care policy more closely than any other group.
The combination of potential impact makes association health plans both good policy and good politics; watch closely for those who oppose this good plan. Opposition to association health plans is opposition to small business, period.
With the right Labor Department rule, National Small Business Week next year will be an even bigger celebration for entrepreneurs and for the American economy.
Hector Barreto is Chairman of The Latino Coalition. He served as the Administrator of the U.S. Small Business Administration from 2001 to 2006.