In a move likely to bring down health insurance costs for restaurants, the U.S. Department of Labor has cleared the way for small businesses to combine their purchasing leverage in pursuit of the lower premiums paid by big corporations.
A federal rule change finalized Tuesday permits associations and other business groups to offer coverage to small businesses across state lines, an alteration that should allow the number of covered entities to scale up quickly, providing a deeper pool of premiums and more leverage in negotiating rates.
“By banding together in an association health plan (AHP), small restaurant owners from Nevada to North Carolina will now be able to purchase high-quality insurance for a more affordable price,” Dawn Sweeney, CEO of the National Restaurant Association, said in a statement.
The association already offers such a plan, through an arrangement with UnitedHealthcare.
“The National Restaurant Association applauds President Trump and Labor Secretary [Alexander] Acosta in supporting American small businesses through the expansion of Association Health Plans. This levels the playing field for smaller businesses, allowing their employees to enjoy similar health coverage benefits as larger employers,” Sweeney said in the statement.
The DOL proposed the rule change in January, the result of an executive order issued by President Trump. Final rules were issued this week.
"AHPs are about more choice, more access, and more coverage,” Acosta said in a statement. “The president's decision helps working Americans—and their families—purchase quality, affordable health coverage."
The Congressional Budget Office has forecast that 4 million individuals will ultimately enroll in an AHP, including 400,000 who currently have no insurance.
With this final issue of rules in place, observers expect to see association healthcare plans appearing in greater number by the fall.