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H.R. 1101, the Small Business Health Fairness Act, would allow small-business employers, including franchise owners, to offer health insurance benefits through membership in a legitimate trade association, including a franchise system.
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By Suzanne Beall
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Health reform is at the front and center of the national policy agenda. The U.S. Congress and the Trump administration are grappling with a myriad of reforms –– everything from tax credits to Medicaid reform and expanded Health Savings Accounts. One important reform of which the franchise community should take note is the renewed effort to create national association health plans.
States around the country are familiar with the AHP concept. In Washington, Oregon, and even Massachusetts, states have allowed trade associations to offer health insurance plans to their members, oftentimes small businesses. This health care option is attractive to employers who, in many instances, only have a few employees and find it challenging to offer affordable health coverage. AHPs allow those small businesses to pool their risks and increase market leverage with insurance companies.
On March 1, the House Education and the Workforce Committee revitalized efforts to nationalize AHPs. The committee took first steps to advance legislation introduced by Rep. Sam Johnson (R-Texas) and Tim Walberg (R-Mich.). H.R. 1101, the Small Business Health Fairness Act, which would allow small-business employers, including franchise owners, to obtain and offer health insurance benefits through membership in a legitimate trade association, including a franchise system. The International Franchise Association strongly supports this legislation and has included AHPs in its 2017 Policy Platform.
Small businesses and the trade associations that represent them have advocated for this insurance reform for years. While the small-business community’s economic output is great, its negotiating power in the health care market is at a competitive disadvantage. Small businesses, and particularly micro-businesses, frequently cite participation requirements and rising health care costs as the main barriers to offering their workers affordable coverage. Negotiating a robust and affordable group health plan for two to three employees is
monumentally challenging.
monumentally challenging.
Further highlighting the need for AHP reform is an issue of fairness. The federal Employee Retirement Income Security Act currently permits large corporations and labor organizations to “self-insure” and offer insurance with certain exemptions from state law. The ERISA exception allows those groups to obtain the benefit of market power in the purchasing of health services. Unfortunately, this policy results in a competitive disadvantage for small businesses.
The Small Business Health Fairness Act will level the playing field. By increasing small businesses’ bargaining power with health insurance providers, small employers will be able to pool their resources and purchase insurance as a large group under ERISA. This important policy change will encourage more health care options in the market, increase coverage and ultimately foster a more efficient health care system. With rising medical costs being a top concern of both individuals and employers, the impact of this increased availability of affordable insurance would be significant.
Suzanne Beall is Assistant Vice President of Government Relations & Public Policy for the International Franchise Association.