Pennsylvania Should Care About Small Business – Association Health Plans Would Ease Insurance Burden


Jezree Friend is the Manufacturer & Business Association’s government relations representative and is responsible for developing legislative priorities and strategies; encouraging membership grassroots activities; and lobbying on behalf of a pro-growth, pro-business agenda. Contact him at

Small businesses are the largest job creators, employ just under half of all private sector employees and should be the continual focus of our state’s retention efforts. After all, if businesses grow, so does the state’s ability to collect more taxes, without having to raise them. It’s a win-win, right?

So What’s the Problem?
Health insurance has remained one of the highest costs of doing business for employers. Rates continue to skyrocket with the most severe impact affecting small to mid-size companies. The majority of companies with fewer than 50 employees are paying a disproportionate amount with the increases becoming unsustainable. Many companies have passed the increased costs on to their employees or made the difficult decision to eliminate health insurance as a benefit all together. Those who choose to absorb the increases, eliminated the potential for pay raises and froze hiring efforts.

How Do We Fix This?
If only there was a way for small businesses to group together to allow insurance carriers the ability to spread out the risk. If small business could band together and be rated in the large group market, they would have a larger buying power to negotiate for discounted coverage. Something those rated in the small group market are unable to do.

Good news: Association health plans (AHPs) allow for this very thing, and thanks to a recent rule change by the Department of Labor, they are once again available for the first time in years. Bad news: If you are a small business owner in Pennsylvania, you are unable to join those already enjoying this financial relief in the majority of other states.

Pennsylvania is concerned with provisions in the Affordable Care Act (ACA) rather than the financial burdens placed on our small businesses. However, their concern is shortsighted; allow me to elaborate.

First, the new AHP regulations will not return the health-care market to a “pre-ACA” world. In fact, every AHP is, by definition, a “group health plan” subject to consumer protections under an array of federal laws. In effect, an AHP is the same type of health plan a large employer offers, subject to the same rules and requirements applicable to a large employer plan.

Second, Pennsylvania fails to recognize that AHPs will provide comprehensive coverage. Small employers — just like large employers — want to attract and retain talented workers and keep their employees healthy and productive. Since they lack the resources and bargaining power of big employers, however, the majority of small employers are unable to offer comprehensive coverage at an affordable price.

Lastly, Pennsylvania is concerned if they allow AHPs to operate in the state, there is potential for fraudulent plans. However, since 1983 regulatory framework has been in place to prevent this very thing. The ACA, which is still the law of the land, established improvements in reporting and stronger enforcement tools designed to reduce fraud and abuse.

There is no factual basis for concluding the past is a prelude here. The nature of the market itself has changed — and in a way that strongly incentivizes current and future AHPs not to engage in fraud and abuse their predecessors committed.

In fact, before it was discontinued, the Manufacturer & Business Association (MBA) offered this benefit for nearly 50 years without fraudulent interference and its fully-insured programs covered up to as many as 50,000 lives.

Most can agree quality coverage is important, want to offer it, and protections should allow for this. However, we cannot ignore that in the first five years after AHPs were discontinued, 25 percent of small businesses providing health insurance were no longer financially able to provide this benefit and that number has grown.

Great news: The MBA is partnering with state legislators, administration officials, business owners and similar organizations to ensure Pennsylvania small businesses enjoy the same financial relief the majority of the country now relishes. Contact me at to share your story and learn more.