Today, the Department of Labor announced a new rule on Small Business Health Plans, also known as Association Health Plans (AHPs).
The new rule allows small businesses and sole proprietors to join together to provide more affordable health insurance for their employees and themselves.
Under ObamaCare, small businesses face benefit mandates and rating restrictions, which large businesses do not. The result has been higher insurance costs for small businesses, leading to a smaller percentage of small businesses offering health-care coverage. For the self-employed, premiums have more than doubled between 2013 and 2017. AHPs, however, will help equalize the regulatory burden between small and large companies because they allow small businesses to join together as if they were a large business.
This new rule expands healthcare coverage by allowing employers to form an AHP on the basis of geography or industry. It also allows sole proprietors to join Small Business Health Plans for the first time ever.
By joining together, employers can reduce administrative costs through economies of scale, obtain more favorable deals due to greater bargaining power, have more opportunities to self-insure and offer more insurance options.
Currently, up to 11 million Americans who work for a small business or operate a sole proprietorship do not have employer-provided health coverage. However, with this rule, the Congressional Budget Office estimates that four million Americans will join a Small Business Health Plan by 2023. 400,000 of these Americans do not have health insurance now.
The new rule does not affect previously existing AHPs. These plans can continue as before if they choose.
The Labor Department will protect consumers by monitoring the AHPs through the annual reports they are required to file. The Department will also work with state insurance commissioners to prevent fraud. Further, there are health-care antidiscrimination protections and other protections that will now apply to AHPs. Finally, AHPs cannot charge higher premiums or deny coverage to people with pre-existing conditions or cancel coverage if someone becomes ill.
This rule follows President Donald Trump’s October 12th Executive Order 13813, “Promoting Healthcare Choice and Competition Across the United States.” The Executive Order required Secretary of Labor Alex Acosta to consider proposing new regulations to expand health care coverage by allowing more employers to form Association Health Plans.
Americans for Tax Reform and the Center for Worker Freedom strongly approve of this new rule, which will offer more healthcare options for Americans at lower prices.