Congressional Republicans are currently workshopping a healthcare plan to counter Democrats’ efforts to stand firm (yet again) on Obamacare. This effort should prioritize restoring association health plans, which can deliver affordable coverage for America’s small business owners and employees.
AHPs allow small businesses to band together to negotiate lower rates from insurers, which their larger competitors often enjoy. Bigger risk pools mean cheaper costs, more stable premiums, and more insurer competition. AHPs free small businesses from the expensive small group or individual market, reducing astronomical health plan costs that are holding Main Street back.
AHPs offer more flexibility and choice. Associations can design plans tailored to their members, such as restaurant workers, retailers, contractors, and farm employees. That means right-sized coverage instead of one-size-fits-all mandates, lowering costs and improving coverage.
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AHPs also streamline hefty compliance costs. Associations handle enrollment, marketing, claims, plan design, and administrative functions that individual small businesses would otherwise duplicate. Centralizing those functions cuts waste and makes coverage more affordable.
It’s no wonder AHPs have a long record of success. Trade groups, chambers of commerce, and professional associations long used these plans to provide affordable coverage. The model worked. Groups pooled employees. They spread risk. They negotiated like large employers.
Unfortunately, Obamacare essentially regulated them out of existence. It forced associations to be treated as “small groups.” That classification triggered strict rules, including community rating and essential health benefits, destroying their advantages.
During the first Trump administration, the Job Creators Network worked with Labor Secretary Alex Acosta to implement a rule allowing associations to be treated as large groups once again. The rule also let sole proprietors join and eliminated restrictions requiring associations to have an economic nexus.
Demand surged. New plans began forming. Entrepreneurs finally saw a path to lower premiums. The Congressional Budget Office estimated the new AHPs would benefit hundreds of thousands of businesses and millions of employees.
Then Democrats sued to stop it, claiming AHPs were an end-run around the Affordable Care Act. Democrats once again sold out American small businesses to pursue their partisan Obamacare-or-nothing agenda. Groups preparing to launch AHPs had to abandon their plans.
Since then, healthcare costs have predictably skyrocketed even further. The Kaiser Family Foundation finds that the average small business family health plan costs $26,000 per year, more than double the pre-ACA cost. Many sole proprietors and mom-and-pop shops pay even more.
The share of small businesses offering health plans has plummeted as a result. Employees are left contending with the ACA marketplace, with taxpayers increasingly picking up the tab.
Instead of expanding Obamacare, lawmakers should focus on free market alternatives. Restoring AHPs and empowering small businesses must be a central part of that plan.
Congress now has the opportunity to pass legislation to codify the first Trump administration’s rule into law and protect AHPs from legal challenges.
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And there’s no reason to limit these plans to only small businesses and their employees. Association plans can extend to churches, Costco memberships, and even Amazon Prime accounts — as articulated in Sen. Rand Paul’s (R-KY) Health Marketplace For All Act — to give all Americans more affordable healthcare options.
AHPs offer a real solution. They increase bargaining power. They reduce administrative waste. They restore competition. They give small businesses the same leverage as large employers. They allow groups to build plans that match their people’s needs. They are a Republican vehicle to lead on health policy and fix American healthcare.
Alfredo Ortiz is CEO of Job Creators Network.
Grover Norquist is president of Americans for Tax Reform.
