Uninsured small businesses in North Carolina could find another avenue toward getting health care via a bill on Gov. Roy Cooper’s desk.

Senate Bill 86 would allow small businesses to band together under trade associations and bargain with health insurers as larger employers. As the bill risks becoming trapped in the debate over Medicaid expansion, advocates and experts say it could extend coverage to the uninsured, at a cost. They warn it could also drive up premiums by 3% for those left on Affordable Coverage Act markets.

S.B. 86 passed the House 82-32 and the Senate 32-9.

The bill came to Cooper at a pivotal time: Unsubsidized consumers are fleeing the ACA individual market. Just days ago, the Center for Medicare and Medicaid Services released a report revealing the Obamacare individual market had a 40% drop in enrollment, as more than 2.5 million unsubsidized consumers left from 2016-18. 

In an earlier report, most of those exiting reported gaining new sources of coverage, but some 25% did not. The majority of the uninsured credited their lack of health care to expensive premiums.  

“I don’t know how you can weaken the ACA any further than it already is,” N.C. Craft Brewers Guild Executive Director Rich Greene said. “It’s crazy. You might just as well have catastrophic insurance and be prepared to shell out a significant amount of money. … We have a lot of people in our industry that are making $50,000 who can’t afford that coverage.”

One in five of those expected to sign onto AHPs are currently uninsured, says a Congressional Budget Office report

In the N.C. Association of Realtors alone, an estimated 6,000 members are uninsured, according to Harper Polling, though that number could be as low as 3,500 people with the poll’s margin of error. 

“We knew we had people who were affected, but we were quite frankly a little shocked,” said Mark Zimmerman, N.C. Realtors senior vice president of external affairs. “There are many more who had to reduce coverage, which means down to catastrophic coverage. Almost all said they had to make difficult decisions to purchase health insurance.”

Groups that switched to AHPs from the individual market could save $8,700 to $10,800 a year; those coming from the small group market could pocket up to $4,100 in savings a year. The savings could be offset by less generous coverage, a report from the health-care consulting firm Avalere says.

Trade associations argue that while people may find ACA individual market coverage unaffordable, they may be able to afford the lower premiums of association health plans. 

“That’s one question that I am fascinated by,” Avalere Associate Principal Chris Sloan said. “People are finding individual market coverage completely unaffordable if they are not eligible for the subsidy. There is a role for other forms of coverage to come in and fill that gap, and AHPs are one of those options. … In some areas, AHPs could play a role in stemming that increase in the uninsured population in the unsubsidized population.”

In Georgia, a similar fight has yielded the Georgia Chamber of Commerce’s SMART Plan, which about 2,000 companies offer to their members for an average 20% savings, said Senior Strategic Programs Manager Lauren Meeks

“It’s been a great benefit to small businesses across the state,” Meeks said. “They love it, they appreciate being able to save so much money. The benefit is equal to other health plans.”

Critics of the plan worry AHPs will further bleed the individual market, poaching its healthiest members and driving up premiums for those left behind. 

But an executive order signed by President Trump would drive up premiums 3.5% in the individual ACA market, as well as 0.5% in the small group ACA premiums, the same Avalere report says. The executive order, among other things, allowed self-employed people to qualify for AHP coverage. 

The report was done before the Department of Labor issued the final rules to implement the executive order, but the CBO later projected similar numbers, assuming healthier people would sign onto AHPs.

“It gets at the fundamental piece of insurance. If you’re really healthy, you’re overpaying, but if you’re really sick, you’re underpaying,” Sloan said. “Depending on how you tip that balance, some people will benefit a lot, and some people will be harmed. In this case, the people going into a cheaper market will be paying less, while the people left behind will pay more if they are not subsidized.”

A large swath of the individual market would remain unscathed. People receiving subsidies wouldn’t notice a difference. 

Some N.C. House Democrats raised concerns the bill would also unravel consumer protections, lifting Obamacare’s 10 essential benefits. Some, including Rep. Carla Cunningham, D-Mecklenburg, would support a veto. 

“If it was in there, that would have made a world of difference to me,” Cunningham said. “People are going to have to really look at the plan that is offered to them, because if the 10 essential benefits are not required, you could need mental health services or maternity leave, and it wouldn’t be covered.”

“Almost universally, they cover the 10 essential benefits — the one exception is pediatric dental. It’s really a non-issue,” said Josh Archambault, senior fellow at the Foundation for Government Accountability. “If people don’t have objections to the generosity of large companies, they have no objection to AHPs. It’s the same. It’s just allowing the small guys to purchase like the big guys for the first time.”

Another obstacle plaguing Association Health Plans is their sordid past. Years ago, a series of scandals broke, involving AHPs’ fraud and insolvency, as well as a rise in bogus entities

“The wild west days of AHPs are over,” Rep. Brian Turner, D-Buncombe, said. “In the ’80s and ’90s, there just weren’t a lot of guardrails or oversight. … But these are much more closely regulated, there are solvency requirements, and they have to adhere to the same rules as any other large group plan in North Carolina.”

But Trump’s executive order, which made the debate possible, is mired in the courts. The executive order loosens the definition of employer, and relaxed the regulations on AHPs. 

A federal judge ruled it was “clearly an end run-around the ACA,” chastising the DOL for stretching the definition of “employer” beyond the bounds of reason, and acknowledging states’ complaints of injury in lost revenues from premium taxes. 

“That change in the definition in employer is really key,” N.C. Retail Merchants Association President Andy Ellen said. “For those who have one person in the business, they’re in the individual market, which is very, very expensive. Those are the people we hear from, who are paying upwards of $25,000 a year for coverage for them and their spouse.”