RALEIGH — Small businesses will be able to band together to slash the costs of their health insurance after Gov. Roy Cooper let Senate Bill 86 become law.
The new law will allow small businesses to cluster under Association Health Plans when bargaining with health insurers over their premiums. Small businesses could save from $8,700 to $10,800 a year by moving from the individual market, and those migrating from the small group market could save up to $4,100 a year, according to an Avalere report.
But that comes at a cost. Those left on the ACA individual market could see a 3.5% premium hike because of the AHPs.
Before Sunday, AHP backers had feared a veto from Cooper. But Cooper only criticized the bill, leaving it to become law automatically after spending 10 days on his desk.
Cooper said he refused to sign the bill because he doubted the plans’ quality of care and their legal standing. While he didn’t veto the bill, he was critical of the plans, and pushed Medicaid expansion as an alternative.
“People have a right to be frustrated with the cost of private health insurance plans,” Cooper said. “These plans, if they survive legal challenge, can take us back to a time when people can be discriminated against for pre-existing conditions in addition to driving up health care costs for everyone else.”
Repeating common concerns around the Affordable Care Act, Cooper also said he feared “potential negative effects on health care.”
Cooper did acknowledge the bill’s bipartisan support. Trade associations representing small businesses and the self-employed supported the bill.
“Through this action, small businesses and independent contractors will now have an option for quality, affordable health insurance through Association Health Plans,” N.C. Realtors Association President Asa Fleming said. “This bipartisan legislation focuses on ensuring that hard-working citizens throughout our state are not allowed to fall into a gap which can’t be addressed in other programs.”
Many of the people who are expected to move to AHPs wouldn’t be helped by Medicaid, even under expansion. For individuals who make more than $50,000, both Medicaid and ACA subsidies are off the table.
Health insurance can cost small businesses $25,000 a month per employee, said N.C. Retail Merchants Association President Andy Ellen.
In the N.C. Realtors Association alone, an estimated 6,000 members could have opted to live uninsured rather than eating the costs, according to a Harper Polling survey.
“It’s a huge opportunity for small businesses and the self-employed to have access to coverage options that are more flexible and affordable,” Foundation for Government Accountability senior fellow Josh Archambault said.
Even though AHPs became law without Cooper’s help, the plans still face an uncertain future. Their fate hinges on the definition of “employer” by the Department of Labor.
A 2018 executive order by President Trump made it possible for AHPs to offer insurance policies under some looser regulations that applied to large employer groups. The rules reduce insurance premiums. But that order is stuck in court.
A federal judge ruled it was “clearly an end run-around the ACA,” arguing that the order stretched the definition of “employer” beyond the bounds of reason.
AHPs also face lingering skepticism from their checkered past, which featured some plans going broke and others involved in fraud over bogus entities. Legislators who supported the law called that past the “Wild West” and emphasized stricter regulations on the modern AHPs.
Advocates for S.B. 86 say today’s AHPs have safeguards in place to prevent these problems from recurring.
“The bill would provide opportunity to the thousands of small business owners across the state who have been forced to pay higher costs or go without proper care. Most importantly, this legislation does not diminish quality of insurance, but instead creates choice and delivers the care that our small businesses need,” Rep. Kyle Hall, R-Stokes, said last week.