The 125 employees at the car dealership Senate Marjority Leader Harry Brown owns could get cheaper health insurance if Senate Bill 86 becomes law. So could thousands of other people working at small companies, along with self-employed workers.
The Small Business Healthcare Act, as S.B. 86 is known, would help small businesses with fewer than 51 employees who aren’t required to provide insurance by the federal Affordable Care Act. Studies show half of them don’t offer employee insurance because costs and regulations price them out of the market.
The legislation would align state laws and the insurance code with a 2018 U.S. Department of Labor rule change making it easier to create Association Health Plans in North Carolina. An AHP allows small companies, independent contractors, and sole proprietor firms to group together. By using their larger size they can get the lower premium rates and broader coverage generally reserved for large companies.
The high cost of health care either prevents entrepreneurs from providing insurance for themselves and their employees, or costs so much it shrinks their profit margins. Those who can’t offer employee insurance or can only provide them plans with high premiums, high deductibles, and minimum coverage are at a major disadvantage when recruiting top talent.
Brown said over the past 10 years premiums have tripled and deductibles have quadrupled. He said car dealers could band together under an AHP and get their employees better coverage.
Sen. Joyce Krawiec, R-Forsyth, a bill primary sponsor, said Thursday a group such as the N.C. Retail Merchants Association representing more than 25,000 stores could create an AHP. Hairdressers, small dress shops, mechanics, and other members who can’t afford insurance, or struggle with premium payments, might be able to join an AHP.
The plans would retain consumer protections under a variety of federal laws. States can regulate insurance plans within their boundaries, and aren’t required to change laws to conform with the federal rule change. But, said Sen. Dan Bishop, R-Mecklenburg, states that want small businesses to succeed will remove restrictions limiting AHPs.
Sen. Floyd McKissick, D-Durham, worries AHPs could cherry-pick healthy people who don’t require many benefits, and harm Obamacare health exchange plans that need that healthy member to subsidize older and sicker participants. He asked how much disruption an expansion would cause.
Senate Majority Leader Harry Brown, R-Onslow, said AHPs would have the opposite effect. Brown said small businesses with an older workforce and pre-existing conditions who lack insurance or pay high premiums would jump at the chance for a more affordable AHP plan.
The bill got unanimous support Thursday in the Senate Commerce and Insurance Committee. It if passes the Health Care Committee, it will go to the Senate Rules Committee.