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Small Business Can’t Wait Any Longer for Affordable Health Insurance

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Jezree Friend is the senior government relations representative at the Manufacturer & Business Association. Contact him at 814/833-3200, 800/815-2660 or jfriend@mbausa.org.

The recent economic shutdown proved just how valuable small business is to our communities. It also shined a light on the disproportionate struggle employees and employers of small businesses face. My job provides me regular communication with businesses across the state, and recent events have increased this interaction tenfold. Due to supply chain disappearance and the economic fallout, employers still operational are forced to prioritize between keeping all their staff employed or paying for health insurance, and those are the lucky ones.

Health insurance has remained one of the highest costs of doing business for employers, and small businesses are hit worse. In fact, small businesses often pay up to 18 percent more than large employers to provide health insurance for their employees. This is in part because large employers have the economy of scale to negotiate lower premiums, administrative costs and often have more stable risk profiles.

As well intentioned as the drafters of the Affordable Care Act were, we cannot ignore that in the first five years after its implementation, 25 percent of small businesses providing health insurance were no longer financially able to provide this benefit because it unreasonably burdened the small group market. Since then, that number has grown significantly.

Currently, 30 states provide relief for small business to purchase health insurance through an association health plan (AHP). These AHPs allow small business to aggregate together and purchase health insurance on the large group market the same way large employers currently do. Pennsylvania’s Senator Michele Brooks and Representative Valerie Gaydos, along with bipartisan support from leadership in both parties, have introduced Senate Bill 993 and House Bill 2200, respectively. When passed, this legislation would give small businesses and their employees the same advantage as large employers.

The bipartisan legislation will: provide comprehensive coverage; protect people with pre-existing conditions; not impact the health coverage people currently have; provide coverage for tens of thousands of people without health insurance; and, provide for essential health benefits.

As other states implemented these small business provisions, the nonpartisan Congressional Budget Office (CBO) conducted an analysis in 2019. The CBO’s study determined, once implemented, roughly 1 million people nationally enrolled in health insurance coverage under an AHP will be newly insured for the first time. Additionally, premiums are estimated to be 30-percent lower for small businesses and their employees.

This is obviously a no-brainer for legislators supportive of small business employees, but this needs to be addressed now. Allow me to explain.

When an employee becomes unemployed, they are given the option to elect
an individual health insurance plan through the Exchange. The problem is, those small businesses that can’t afford the high cost of health insurance, or employees who have only been partially laid off, aren’t allowed to use the Exchanges. That’s the case for many of the 1,134,053 Pennsylvanians who filed for unemployment benefits due to the statewide business shutdown between March 15 and April 6. For comparison, in the prior three weeks, that number was just 40,000.

This is particularly concerning since the cause of their unemployment and subsequent inability to secure health insurance is the product of a growing health crisis when coverage is needed most. We can all agree that providing a way for our neighbors without health insurance to have coverage for the first time, while keeping it affordable for small business, is a win-win.

We share the governor’s concern for the health and safety of Pennsylvanians. However, in uncertain times, well- intentioned, hasty decisions can do more harm than good. It is imperative Pennsylvania immediately prioritize this legislation. Failure to miss this window will continue to increase the number of Pennsylvanians without health insurance coverage and fail to provide relief to small business during this unprecedented time.