Earlier this month, the Department of Labor released a proposed rule that would enable as many as 11 million Americans to sidestep some of Obamacare’s premium-inflating coverage regulations. Specifically, the new rule allows small businesses and self-employed Americans within the same state or metropolitan area, including areas that extend across state lines, to band together to purchase large-group insurance policies through so-called association health plans, or AHPs.
The rule basically legalizes affordable health coverage for small businesses.
At present, businesses and individuals have little choice but to buy coverage in the individual or small-group markets. These plans are subject to Obamacare rules that have sent premiums soaring. Obamacare’s essential health benefits mandates, for instance, require all plans sold on the individual and small group market to cover a long list of potentially costly services and procedures, from pediatric dental care to speech therapy.
By effectively banning simple, low-cost coverage, such rules have made insurance more expensive for individuals and small businesses. On Healthcare.gov, the federal exchange that covers 39 states, the average premium for the second-lowest benchmark silver plan rose by 38 percent this year. By contrast, the average premium in the large-group market, where Obamacare’s mandates don’t apply, rose by only 5 percent.
AHPs also give small firms and self-employed individuals more bargaining power to obtain favorable rates from insurers. For instance, dozens of small landscaping companies could form an AHP. That economy of scale enables them to save big bucks and tailor coverage to members’ needs.
For years, Obamacare has forced many small businesses and sole proprietors to purchase prohibitively expensive, excessively comprehensive health insurance. The AHP rule would give these folks a more affordable option.