Allowing Interstate Insurance Sales Will Harm Small Businesses
Statement by Small Business Majority Founder & CEO John Arensmeyer on why the administration’s executive order allowing for association health plans will be terrible for the small group market and small firms
We are extremely disappointed this administration continues to undermine the Affordable Care Act (ACA), as evidenced today when President Trump signed an executive order allowing insurance companies to sell health insurance products across state lines and making it easier for groups to establish association health plans (AHPs). These changes would be bad for small businesses and their employees because they could lead to higher premiums, unbalanced risk pools and lower-quality insurance.
While President Trump’s order would make it easier for a few select small businesses with younger and/or healthier employees to purchase association health plans that might be cheaper in other states, the tradeoff is that this would result in the emergence of parallel insurance markets for small businesses, leading to major spikes in premiums for small firms that remain in the small-group market.
What’s more, these multi-state plans would offer fewer consumer safeguards. In fact, employees covered by these association plans would not actually be protected in the state where they live since the regulations created for the specific plan would supersede state laws that protect consumers from rate increases and poor coverage.
President Trump’s order is also unnecessary because small businesses are already allowed to band together to purchase health insurance. That system is called the small-group market, and the more people we have in the small-group market pool, the lower premiums will be for participants. Encouraging people to leave the small-group market, however, will only harm small firms by raising their premiums.
This administration has shown once again that it cannot and will not accept a simple truth: The ACA has helped millions of small business owners, their employees and solo entrepreneurs gain quality, affordable health insurance. Instead of continuing to play reckless partisan games with benefits that are vital to the survival of small businesses, we implore President Trump to seek bipartisan solutions that will improve the ACA so that America’s job creators can continue to thrive.
About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of a thriving and inclusive economy. We actively engage our network of more than 55,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.