How Replacing Obamacare Would Affect Small Businesses

Some small-business owners burdened with high health care costs would get a break from an obscure provision in the Senate health bill. It offers less regulation, more bargaining power and better prices.

But those benefits could come at a cost to others.

The clause — in the proposal advanced by Senate Majority Leader Mitch McConnell (R-Ky.) last month — would exempt insurance sold through “associations” from most Affordable Care Act mandates and state regulations. That means the plans could offer lower-cost coverage that does not include a broad range of medical services or sets premiums based on the health of the businesses’ employees.

In these plans, small businesses can join an association — which may be loosely based on certain types of professional, trade or interest groups — that offers insurance to members.

“Our members are clamoring for more control and more affordable options,” said Kevin Kuhlman, director of government relations for the National Federation of Independent Business, which has long opposed the ACA and supports association plans. The idea also has the backing of the National Restaurant Association.

Critics counter that the provision creates two markets, a lightly regulated one with skimpier and less expensive coverage that would attract businesses with younger or healthier workers and a second market left with mainly older, sicker consumers and rapidly rising premiums.

The Senate plan — along with other GOP proposals that would loosen ACA requirements for some policies — could damage both the small-group and individual markets if it leads to cheaper plans siphoning off the healthiest consumers.

State insurance commissioners warned in a letter Wednesday that the Senate proposal would strip regulators’ authority “to preserve important consumer protections, effectively oversee the plans or ensure a level playing field.” While encouraging the idea of more insurance options, the National Association of Insurance…

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