The coming revolution in small business health plans


The most dramatic change in small business health plans is expected be introduced by the Trump administration later this week. By relying on executive branch power rather than congressional lawmaking, the administration can effectively revolutionize small business health plans.

How is this possible? Isn’t health insurance controlled by state law? Yes but the biggest deterrent to innovation has been IRS regulation and prohibitions against insurance transactions across state lines. By overriding these, the administrative branch of government can effectively change the small business health care system.

What will change? Expansion of limited benefit insurance (aka “mini-med“, tele-medicine, short term medical insurance, international insurance for immigrants, and non-insurance medical plans like HRAs, FSAs and HSAs will be enabled by relaxing the regulations that currently restrict their use. Small businesses will notice an immediate expansion of low cost on demand services online and advisers in sharp contrast to the government-controlled insurance exchange and navigator system.

Is it that simple? No. Small business owners must make a mental shift in paradigm to make room for theses new health plans. No longer will the business health plan be the primary source of coverage for chronic and catastrophic medical conditions. A change may require a shift in our view of discrimination in employee benefit plans. I predict that most small business owners will want the help of a trusted financial adviser in this process.

Will this really reduce the cost of health care? No. In fact this administration’s change will likely eventually increase the overall cost of the nation’s health care and result in increased suffering and mortality for some. For every dollar that you save through these new options, you will trade off some type of potential benefit and assume some level of financial risk. The point is that now you will have the choice to select lower cost options that were not available before under the Affordable Care Act and other prior regulations.

Who wins and who loses? Small business owners win with more options to save money. Healthy employees also win. Employees with catastrophic or chronic medical conditions may lose. State power to control health plans will be weakened and I suspect that we will see an increase in scams and unethical health plan sales practices.

How can I learn more? This is all speculative right now so we must wait until the changes are actually implemented. But if you want to get an early preview, check out the insurance information on my business web site that pre-dates the Affordable Care Act. Also, non-insurance health benefit plans for small businesses are described at that has already been updated for 2018.

I am planning a series of videos and in-person presentations on this topic. Feedback and comments are welcome at this early stage.

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