President Donald Trump claims his latest health care policy change will help small businesses. In fact, it does the opposite.
In remarks made after the finalizing of a rule change that will permit business owners to offer health reimbursement arrangements that employees can use to purchase coverage that doesn’t comply with the Affordable Care Act’s rules, Trump said: “This announcement is a monumental victory for small businesses, for their workers and previously uninsured Americans who will now have access to high-quality health plans of their choice.”
What Trump either cannot or will not accept is small businesses already have access to “high-quality health plans” under the ACA, and the data supporting this claim is not “fake news.” Small Business Majority’s research found more than 5.7 million small business employees or self-employed workers are enrolled in the ACA marketplaces, and more than half of all ACA marketplace enrollees nationwide are small business owners, self-employed individuals or small business employees.
The Trump administration’s latest policy change, however, makes it less likely small firms will continue to have access to quality, affordable care.
In order for small businesses to be able to receive affordable coverage, ACA marketplace risk pools must be robust and well-balanced. While tools such as HRAs are a way for small businesses to offer increased choice to small business owners and their employees, these plans should supplement the ACA rather than undermine it. This is why it’s a mistake for the Trump administration to allow employees to use an HRA to purchase a non-ACA compliant plan, like an association health plan or a short-term, limited duration plan.
AHPs and short-term plans are not required to cover essential health benefits like prescription coverage or mental health treatment. Additionally, some of these plans do not have to comply with community rating rules that prevent insurers from charging more to individuals based on factors such as gender or pre-existing conditions, and they allow insurers to turn away buyers they deem to be too sick or expensive to insure.
Individuals likely to purchase coverage through AHPs or short-term insurance plans tend to be younger and healthier, leaving sicker workers in the individual and small-group marketplaces. Enabling more use of these plans through the HRA rule changes will create an unbalanced risk pool that disrupts the marketplaces and raises costs for everyone else who remains. We know from our scientific opinion polling that the cost of health insurance is a top concern for small business owners, and the proposed changes will be harmful for solo entrepreneurs and small business employees by raising rates for individuals and entrepreneurs dependent on the health care marketplaces.
HRAs are undoubtedly a valuable resource for small businesses, but any changes regarding their use must not undermine the ACA. Unfortunately, this is the third-major effort by the administration to harm the ACA after its attempts to outright repeal the law failed.
Instead of using new policies like viruses intended to infect the ACA, lawmakers should do everything possible to ensure small businesses can access quality, affordable health coverage so they can focus on running their businesses. This means strengthening the small group and individual exchanges, rather than enacting rules that will create instability in the health insurance markets.
John Arensmeyer is the founder and CEO of Small Business Majority.