Senate Failure to Repeal Short-Term Insurance Plans Another Blow to Small Businesses

For Immediate Release: 
Wednesday, October 10, 2018

Statement by Small Business Majority Founder & CEO John Arensmeyer on why the U.S. Senate’s decision not to overturn a new federal rule that expanded the duration of short-term health insurance plans is bad news for small firms

We are disappointed the U.S. Senate failed to overturn a new U.S. Department of Health and Human Services rule extending the duration of short-term insurance plans to last up to 364 days. Leaving this rule in place will likely result in many healthy people exiting the Affordable Care Act (ACA) marketplaces, and that is very bad news for the millions of small businesses, small business employees and solo entrepreneurs that depend on the marketplaces for quality, affordable insurance.

Short-term health insurance is intended to fill gaps in an individual’s coverage in the event of job loss or other life changes. These plans are not required to cover essential health benefits like prescription coverage or mental health treatment and can come with hefty deductibles, which is why they are inexpensive. The Trump administration estimated as many as 1.6 million people will purchase short-term plans by 2022, and we expect many of them will be younger and/or healthier. This will create an unbalanced risk pool that disrupts the individual marketplaces and raises costs for everyone else who remains in those marketplaces.

If the administration’s prediction is accurate, it will devastate small firms. More than 5.7 million small business employees or self-employed workers are enrolled in the ACA marketplaces, and more than half of all ACA marketplace enrollees nationwide are small business owners, self-employed individuals or small business employees. Without healthy people in the marketplaces to offset the costs insurance companies incur to care for older or sicker people, premiums will rise drastically and many small businesses will be priced out of the market.

Most politicians claim they are looking out for America’s small firms, but today’s vote is one more example of a missed opportunity by Congress and the administration to help small businesses. Until lawmakers choose good policy over politics, there is nothing to suggest anything will improve. In the meantime, America’s job creators will continue to pay the price for partisan bickering.

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 58,000 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 TwitterFacebook and Instagram.

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