A Better Way Forward: Allow Small Businesses and Their Workers to Pool Risk


Our health-care system puts small businesses at an enormous disadvantage in providing health benefits to their workers.

Most Americans work for smaller employers (50 employees or less) and these employers are the growth engines of our economy. However, our employer-based insurance system makes health insurance a far greater burden for those employers and many cannot afford to provide quality coverage to their workers. Smaller employers buy coverage for a relatively small number of workers at a time, so those businesses pay more than larger employers or labor unions for the same health coverage. Indeed, small businesses pay nearly 20% more than large business for similar benefits, and they are far less likely to provide health insurance at all.

Our health care system shouldn’t discriminate against small businesses in favor of big corporations and unions. A better system would allow small businesses to work together to match the advantages that big corporations and unions have and allow their workers the same access to affordable, high-quality coverage.

Key reforms for achieving that goal include:

• Allowing small businesses to join together through their trade and professional associations to form Association Health Plans for the purchase of coverage, enabling them to enjoy the same economies of scale, administrative efficiencies, and negotiating power enjoyed by unions and large employers.

• Allowing civic, community, and religious groups to purchase health coverage for their members, giving people who do not have access to affordable employer coverage the ability to pool together outside of the workplace to buy health insurance.

Reforms like these would help level the playing field between small and large businesses (and their employees) without resorting to overbearing mandates and penalties. Federal policy in recent years has leaned far too heavily in favor of the most powerful players in our economy—inhibiting competition and innovation, and hurting most of the nation’s workers, who are employed by small businesses. A better way is to enable small businesses to have the same advantages and benefits as larger ones.