I don’t know how many Xconomy followers still read print newspapers. But did you see this headline—Health Coverage in Limbo for Many Small-Business Employees—on The Seattle Times’ front page? It’s a storm warning the state’s innovation industries can’t ignore. If you’re a leader of a tech or life science company, your existing insurance plan could be gone within the year.
How is something like this possible in the post-Obamacare health care world, you might ask?
The short answer is the state’s elected insurance commissioner is taking aim at association health plans (AHPs), which are by far the most popular insurance tools in Washington’s small business market. It’s no coincidence that our state’s tech and life science sectors took root shortly after lawmakers OK’d AHPs in 1995. They were designed with the small business and entrepreneur in mind: Over the past two decades these plans have allowed them to offer employee-benefit packages that equal or even surpass those of large employers like Microsoft, Google, and Amazon.
The insurance commissioner has lately cloaked his long-standing opposition to AHPs by citing the federal Affordable Care Act, which many believe is a misinterpretation of ACA rules. Obamacare doesn’t speak to association health plans. Nonetheless, the insurance commissioner has so far rejected most of the AHPs that have come to him for review this year.
If you run an early stage tech or life sciences company you know that the quality of health insurance you offer is not a trivial decision for many new hires. You know there is a back-and-forth conversation between the prospective new employee and their spouse that goes something like this: “Honey, I’ve got an offer from that startup in Pioneer Square. It seems like a great company and I’m really excited about it…” The spouse response (among many questions), “What kind of health benefits package do they have?”
What kind of health benefits, indeed.
For 20 years, association health plans have allowed the industry to pool the buying power of small companies to create the kind of health benefit packages that heretofore only larger companies could offer. This has helped level the playing field when early stage companies compete for talent and is a reason we continue to have a vibrant, early stage tech and life sciences community—one that increasingly propels our state economy. The strategy of the insurance commissioner is not just unhelpful—it’s likely destructive.
The current standoff is far from settled and it’s important that tech employers keep informed of the situation, understand what is unfolding, and make sure their voice is heard. Regardless of the health care future our state insurance commissioner might envision, for him to eliminate AHPs means more expensive coverage with reduced benefits for smaller employers in the industry. And it isn’t just those in tech and the life sciences whose coverage is at risk: More than 500,000 people, working men and women in small businesses across the state, are in AHPs.
Half-a-million is a lot of people. I can guarantee that we will all know someone affected by this change.