The Department of Labor recently published its final Association Health Plan (AHP) rule, which is poised to slash health care costs for businesses nationwide.
The department’s AHP reform expands health insurance options for small-business owners and their employees by making it easier for them to form cost-saving associations, which reduce administrative costs and reward small businesses with more choices in the marketplace. As the department explained, AHPs “strengthen employers’ negotiating power with providers from larger risk pools and greater economies of scale.”
Moreover, AHP reform exempts many employers from some of the Affordable Care Act’s most costly mandates. In Labor Secretary Alexander Acosta’s words: “Many of our laws, particularly Obamacare, make health care coverage more expensive for small businesses than large companies. AHPs are about more choice, more access and more coverage.”
He’s right. The Congressional Budget Office estimates the new rule will provide health insurance to 4 million Americans, including 400,000 who are currently uninsured. Employers and employees, meanwhile, are expected to see lower health care costs and higher cash flows.
This is a win-win for working Americans. For too long, Obamacare saddled businesses with burdensome regulations that did nothing to rein in premium increases and other health-related costs. In fact, premiums have only skyrocketed under Obamacare. Look no further than small businesses themselves: According to a recent Job Creators Network poll, 77 percent of small-business owners expressed concern about rising health care costs.
For good reason. Premiums for many Obamacare plans are projected to increase by nearly 40 percent this year. Small businesses have been grappling with premium hikes since the law’s inception. Virginia-based Workshop Digital’s premiums are rising by 55 percent this year. New York’s W.H. Christian, a clothing supplier, has seen health care costs increase between 150 percent and 180 percent over the last decade.
Being in business and paying for health care are extremely difficult tasks to juggle. To insure my family, I pay $33,000 a year. That’s right: For my family alone. Then there are my employees: Even though I pay 50 percent of my workers’ premiums, all of them have dropped their health coverage in recent years because they simply can’t afford it.
Fortunately, AHP reform shines a light at the end of a very dark tunnel. Introducing my small business and countless others to association plans essentially allows us to negotiate for better and cheaper health care. As a group of employers joining together for health insurance grows larger, health insurance providers are more likely to reduce rates because they’ve gain accessed to more consumers.
When health care costs go down, the U.S. economy reaps the benefits. As a small business owner, I’m determined to reward my employees and serve my customers. If I can save money on health insurance, then I have more resources left over to give out pay raises and bonuses, expand my business operations domestically and intentionally, and ultimately boost the customer service experience.
In America, there are more than 30 million small businesses that employ 60 million workers — half of the U.S. workforce. Cut their costs, and they’re suddenly better-equipped to support their local communities and grow the economy writ large.
I applaud the Labor Department for helping small businesses — and the people they serve.
