For small business owners and independent professionals, the fight to obtain economical and effective health insurance is a slow-motion train wreck whose collateral damage seems to increase with each passing year.
It’s not surprising health insurance is expensive for small groups, while its value is often limited. We’re told that the health insurance market is mysteriously different from other insurance markets, but for small business owners two realities prevail.
First, spending money on health insurance does not guarantee employee health, or even healthcare. For health insurance does not guarantee coverage; coverage does not guarantee care; care does not guarantee good care; and none of this guarantees personal health. How monumentally frustrating it is, that for a per-employee monthly bill often exceeding a house payment, there is only one true certainty: that of economic warfare with our insurance companies, should we or one of our employees become injured or ill.
Second, small groups – particularly groups of one or two – have minuscule leverage in the health insurance market. As a small group, our risk can be evaluated and avoided piecemeal. Small groups pay premiums for what our insurance companies – not our doctors or medical science – perceive as potential future risk.
This is a scenario small business owners regularly face, but one that is also antithetical to the workings of a well-functioning insurance market. Any healthy insurance market pools risk, by assembling a large and diverse group to share the costs impacting a small fraction of that group. We pool risk for our homes and vehicles – even when we buy as individuals of varying age and experience, we are still considered part of a larger risk pool. But for health insurance, we’re treated as individuals whenever possible.
It doesn’t have to be this way. While I do not often find Trump administration proposals appealing or sensible, the proposal to allow associations of all kinds, nationwide, to purchase health insurance is just that – appealing, and sensible. Particularly to individuals and small business owners for whom health insurance is a major cost.
Vested interests are already banding together in opposition, arguing that new groups might consist only of healthy people, thereby raising costs for everyone else. While I favor sensible regulations and rules for associations buying insurance, it is difficult to see why an association of small businesses, or CPAs, or union members, or plumbers, or chemists, or physicists is inherently different from a group of people who happen to be working together in the same large company. On the other hand, it is easy to see why additional competition and risk pooling can benefit those of us without much leverage in the current health insurance market.
The proposal seems a simple and sensible way to increase competition and choice, and nudge a distorted health insurance market towards the risk pooling that makes other insurance work.