A state Senate bill introduced Tuesday represents the latest attempt to allow small employers to offer an association health-insurance plan that could provide lower premium costs.
Senate Bill 86 would loosen the requirements for AHPs in North Carolina in response to federal Labor Department changes made in June by the Trump administration.
The legislation piggybacks on previous bills, such as permitting a grouping of employers in the same trade, industry or line of business in an AHP. Employers could have up to 50 workers to qualify.
What’s new in SB86 is that an AHP could be accessed by non-affiliated employers within the same region or metropolitan area, allowing for the crossing of state lines in some instances.
The bill would allow sole proprietors and the self-employed to enroll, which has attracted the support of groups such as the NC Realtors trade group. Bill co-sponsors said the legislation could potentially benefit up to 110,000 employees.
Co-sponsors stressed the legislation would allow qualified employers to offer health insurance plans “that would include many state and federal consumer protections, including the requirement to cover those with pre-existing conditions.”
“The AHP market is a way for small businesses to pool together and purchase plans at a lower cost,” said co-sponsor Sen. Joyce Krawiec, R-Forsyth.
“This bill would put small businesses on a more level playing field with large companies, making it possible for them to offer more attractive benefits packages to recruit the best and brightest talent.”
The AHP has to be offered by a nonprofit with at least 500 members. The nonprofit has to have been in business for at least two years for reasons beyond providing insurance, such as a chamber of commerce or a trade group.
Critics of AHPs say giving small employers access to the flexibility of larger employers could lead to those plans opting out of providing 10 essential health benefits required in the federal marketplace under the Affordable Care Act.
Those benefits are: ambulatory patient services for outpatient services; emergency services; hospitalization; maternity and newborn care; behavioral health services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services, and chronic disease management; and pediatric services, including oral and vision care.
Critics say the bill may allow small employers to cherry pick industry sectors and regions to attract primarily young healthy individuals, which could leave older and less healthy individuals with more expensive premium options.
“Our concern is that these AHPs would not provide adequate coverage for employees for the care they are expecting or that they need,” said Brendan Riley, policy analyst with left-leaning N.C. Justice Center.
“There are more effective ways of closing the uninsured gap than these plans, particularly having North Carolina expand its Medicaid program” to between 450,000 and 600,000 North Carolinians.
In June, the Republican-controlled General Assembly failed to advance a state Senate attempt to introduce a cheaper, skimpier and unregulated health insurance option, initially with nonprofits with a statewide presence.
The most public supporter of the option was the N.C. Farm Bureau. The plans wouldn’t have been considered as insurance, so certain insurance regulations wouldn’t have applied to them.
Critics worried about the potential loss of ACA rules requiring coverage of pre-existing conditions, barring medical underwriting and prohibiting annual or lifetime benefit limits.
Krawiec said SB86 is different in that AHPs are heavily regulated by the state Insurance Department. “They are required to comply with North Carolina’s 57 state-benefit mandates and must also follow federal consumer protections,” Krawiec said.
Mitch Kokai, policy analyst with Libertarian think tank John Locke Foundation, said SB86 appears to represent legislators learning lessons from the N.C. Farm Bureau effort.
“It appears the co-sponsors have talked with the Insurance Department and insurers to see what they objected to in the previous bill in hopes they will not lobby against this bill,” Kokai said.
“I think there’s general support among legislative leaders for loosening unnecessary restrictions and increasing affordable health insurance options. That bodes well for this type of bill.”
Primary bill sponsor Sen. Dan Bishop, R-Mecklenburg, said small businesses have struggled to provide affordable health insurance to their employees despite recent laws that have reduced their state tax expenses.
“This bill is the missing piece of that puzzle,” Bishop said.
In November, the N.C. Restaurant & Lodging Association began its attempt at the state’s first AHP.
The industry group’s plan, known as a benefit trust, would be available to hotels, restaurants, country clubs, bars and other small hospitality businesses with between two and 99 full-time employees.
Members of the restaurant association have to request a quote for themselves and their employees, and rates are based on a variety of factors.
Margo Metzger, communications director for the restaurant and lodging association, said Tuesday that the state Insurance Department is reviewing its AHP.
“We are hopeful that it will be resolved soon, but we do not have a timeline for when it will be approved,” Metzger said.