News

Labor Department rule would open large group health insurance to small restaurateurs

January 4, 2018

The U.S. Department of Labor this morning proposed a rule that it says will allow more small businesses to offer health insurance through what it is calling Small Business Health Plans or Association Health Plans.

In a news release, the labor department said the rule is designed to address that "up to 11 million American small business workers" face because they don't have employer-sponsored insurance. If the new rule becomes law, small businesses could join together into a single group to buy health insurance on the large group market, which might be more affordable to the businesses. That, in turn, might make such plans available to those working for small businesses that both joined a larger group and offered the plans to their employees. 

In its release about the proposed rule, the labor department said, "These improvements stand to open health insurance coverage for millions of Americans and their families by making it more affordable for thousands of small businesses and sole proprietors. By joining together, employers may reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure, and offer a wider array of insurance options."

Three of the provisions of the 83-page proposal include: 
•    Groups could be formed based on geography or industry. 
•    Sole proprietors could join groups, as well. 
•    Plans could not charge higher rates or refuse participants because of health, (already part of the Affordable Care Act, however). 

The rule will be published tomorrow, Jan. 5, in the Federal Register, meaning the public has until the first week of March or 60 days to register comments on the plan and whether it should become law. 

The nation's largest organization for restaurant owners,  the National Restaurant Association, has already said it stands behind the measure. 

"The National Restaurant Association applauds the administration for supporting healthcare options for small businesses to allow them to pool their resources to provide healthcare for their employees," NRA Senior Vice President for Health and Insurance Services Clinton Wolf, said in an email to this website. 

However, in a U.S. News & World Report article this morning, the Associated Press reported this morning that the rule is more of the Trump administration's attempt to make it lawful to sell insurance policies across state borders, which ultimately might cost less by also cover far less, according to the Associated Press article.

The article said that while the insurance industry itself is unsure about the rule, consumer groups fear it will end up hurting patients who lose Affordable Care Act protections and benefits, while state regulators for health insurance say it brings the specter of federal interference into the plans potentially leading to both problems and legal challenges. 

The AP quotes acting Pennsylvania Insurance Commissioner Jessica Altman as saying, "Generally speaking, these types of plans are exempt from state law and outside my jurisdiction," the Democratic appointee said in an interview. "That means any issues that consumers have, I won't be able to help them. More and more people would fall under the jurisdiction of the federal government, and I think state regulators would say we really do it better."