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Health Insurance Still a Problem; Small Business Needs Leaders

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The side effects of COVID-19 have been devastating for our economy. Employers are struggling to attract and retain employees, and small businesses have the deck stacked against them.

Small businesses are often unable to compete with larger businesses’ benefits packages. Employers with less than 50 employees who purchase health insurance on the “small group” market have stricter guidelines — an unfair, age- banded rating system compared to larger employers — on top of skyrocketing price increases.

The Manufacturer & Business Association (MBA) has partnered with many trade associations across Pennsylvania for a unified voice for our thousands of members looking to us to help provide a solution to the rising costs of health insurance. An association health plan (AHP), similar to one’s currently being offered in over 30 other states, is a viable option to help reduce costs and provide comprehensive health coverage.

For three years, the MBA and its partners have engaged the Wolf administration, Pennsylvania legislators and insurance carriers to make way to help small business through an AHP.

In short, an AHP allows small business to aggregate together to purchase health insurance the same way large businesses currently do. This helps to level the playing field by increasing the number of health insurance choices in the marketplace. Due to its size, an AHP can negotiate lower premiums, increases competition, provides more networks, and even benefits insurance carriers as it spreads out the risk.

So, what’s the problem? Opponents of an AHP either do so for political reasons, refuse to acknowledge the rising costs, or simply do not understand how they work.

The Pennsylvania Insurance Department (PID) fails to see the problem, alleging there has only been a 3-percent increase in the “small group” market. If you are an employer that purchases health insurance for your employees, you just laughed out loud. The truth is many employers are reporting increases of more than 40 percent.

Efforts to bring these numbers to the attention of PID and leaders on Pennsylvania legislative Insurance Committees are met with a neglectful push to the subsidized “individual” market or an uninformed response that Affordable Care Act (ACA) rates are benefiting small group age-banded health insurance costs.

However, the recent ACA Index Report found that five-year trend lines showed a steep increase in premiums. Since 2016, average premiums increased 40 percent, while family premiums increased 39 percent. Furthermore, annual potential costs for a family of four topped $25,000. For 2021, the average four-person family paid $16,776 in annual premiums and faced an annual deductible of $8,440.

It must be noted, the recent increase in government subsidies will expire and employers in the “small group” market impacted by these rate increases are not even government subsidized.

Here are the facts: AHPs have and will continue to offer in some cases more comprehensive coverage than what is currently in the “small group” and “individual” market plans; AHPs in other states are voluntarily covering all 10 “essential health benefits”; AHPs offer broader “health-care provider networks” relative to many existing ACA “small group” and “individual” market plans, and they are priced at an “actuarially fair premium” for both young and old AHP participants; and, AHPs are subject to specific rules that prevent them from discriminating against employees based on a health condition. Most importantly, AHPs are prohibited from denying people coverage if they have a pre- existing condition.

Sounds like a no-brainer, right? There are two ways AHPs can become a reality. First, the Pa. Insurance Commissioner could simply issue an Insurance Bulletin. Second, the Pa. legislature could pass either House Bill 555 or Senate Bill 235.

With small businesses and what’s left of their employees grasping for survival, we need leaders who are willing to act and not hide behind political platitudes.