Will Trump's scaled-down health plans fly in today's hot labor market?

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109523 full

President Donald Trump's newest executive order aims to expand the use of "association health plans," something he says will help small businesses afford coverage. 

Association health plans allow groups of small business owners to band together and buy health insurance coverage together. The idea is, by creating a larger pool of coverage holders, costs will go down.

Association health plans are also more affordable because they aren't subject to the same coverage requirements in the Affordable Care Act, something health advocates say will stick patients with more of the bill.

Betty Jo Toccoli, president of the California Small Business Association, said many of the state's small business owners are eager to find affordable options for health care, including plans with reduced coverage.

The SCSBA represents more than 200,000 small businesses in California, all of whom have 100 employees or less. Under the ACA, employers will 50 or more people must provide health care for their employees.

Toccoli said many of their members are not required to provide health care, but they want to. An expansion of the association plans, as directed under Trump's order, offers hope of finding plans that they can afford.

"They want to be able to afford to provide it," she said, noting that many small businesses have just a handful of employees. "Their employees are like family."

She added that while the economy is strong, small businesses in California often struggle to pay the bills.

"They are hanging on with their toenails," she said, bemoaning California's high taxes, overhead costs and regulations. "Many of them have quit providing health coverage."

Companies who don't provide health insurance benefits can struggle to attract and retain skilled workers, especially in the current labor market. California – along with much of the nation – is now at full employment. As a result, skilled labor is often hard to find, and employees can easily jockey to new jobs where firms offer better pay and benefits.

That's motivating employers to provide the best health care they can afford, said Southern California insurance broker Bruce Jugan. He told KPCC he can’t imagine that many employers will trade down to an association health plan to save money.

Jugan runs Benefits Cafe, a longtime health insurance brokerage in Montebello, where he helps business owners choose from a variety of different health care plans.

"There is less than 5 percent unemployment, so to keep a good employee and to get a good employee is difficult. So employers we’re seeing are, more and more, offering health insurance as a way to attract and retain good employees, and they don’t just offer the lowest cost plan."

Jugan says most of his clients choose what's known as a silver-level ACA plan as the lowest level of coverage, which is considered mid-range. A bronze-level plan is less expensive and provides the most minimal individual and group coverage under law.

However association health plans are classified differently, and allow employers to provide less coverage than bronze-level plans.

"But if you want to give your employees something, which is better than nothing...then that may appeal to certain employers," Jugan said. 

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