Small Business Advocate Applauds Movement on Positive Health Care Reforms, and Today’s Court Decision on Short-Term Transitional Plans

By at 19 July, 2019, 2:21 pm


For Immediate Release

…Urges Action on the “HIT” and Expresses Unease About “Arbitration” to Surprise Billing, and Certain Drug Price Proposals

Washington, D.C.  – It was a big week for health care reform. The Trump Administration announced another positive initiative for patients and small businesses, and the U.S. House advanced a package of reforms addressing numerous issues related to high costs and transparency. Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan said the focus on health care has generally been good news for entrepreneurs and small businesses, but the group is keeping a close eye on key issues that could raise costs and undermine innovation on life-saving drugs.

“Health coverage costs and access to care remain big concerns for entrepreneurs and small businesses, and it is positive to see both the Trump Administration and Congress advancing sensible changes and reforms that address key problems. At the same time, we are watching a few things that would prove to be counterproductive, but we remain hopeful that lawmakers and regulators will continue to consider our concerns,” said Kerrigan.

In positive news, the Trump Administration announced new guidance on health savings accounts (HSAs), which will help patients better manage chronic conditions, provide more affordable access to treatments, and in the end prevent these conditions from worsening. This first action stemming from Executive Order 13877 (“Improving Price and Quality Transparency in American Healthcare to Put Patients First”) expands the list of preventative care benefits permitted to be provided by a high deductible plan, which will allow patients with chronic conditions such as diabetes, heart disease and asthma to use their HSA dollars to pay for treatment and care before they meet their deductible. This change is effective immediately.

“This important change will allow patients with chronic conditions to manage their health and costs more effectively. We applaud the Administration for listening to patients and the business community,” said Kerrigan.

Legality of Changes to Short-Term Plans Upheld

This latest action on HSAs by the Trump Administration follows a June 14 announcement that expanded and improved health reimbursement accounts (HRAs). These changes will be particularly helpful for small businesses. In August of last year, the Administration also made important changes to short-term plans, and on July 19, a judge ruled that the Trump Administration’s changes were legal and had the authority to do so. Specifically, the final rule lengthened the use of short-term, limited-duration plans from Obamacare’s three-month limit to up to three years, as improved by the Trump Administration rule.

According to The Hill, U.S. District Judge Richard Leon said, “Not only is any potential negative impact from the 2018 rule minimal, but its benefits are undeniable.”

SBE Council fully agrees.

“The judge’s ruling is good news for people who want to start businesses, but need affordable transitional coverage in order to take that risk. It is good news for people who need to leave the workforce for personal or family reasons, but need affordable coverage for longer than the restrictive and impractical three-month limit set by Obamacare,” observed Kerrigan.

Caddy Tax Repealed by U.S. House   

Also, this past week, the U.S. House passed H.R. 748, the “Middle Class Health Benefits Tax Repeal Act of 2019” by a vote of 419-6. The legislation fully repeals the “Cadillac Tax.” The U.S. Senate is expected to act on the legislation soon.  SBE Council has been working with a coalition of business groups in support of repeal and recently signed a letter urging action on the legislation. Over time, the 40% tax is expected to hit all plans, which will put health insurance out of reach for many more small businesses and the self-employed.

“Partially due to taxes and the threat of impending taxes, health coverage costs have increased and access to health care has become more expensive. Repealing this tax is important, and we are pleased to see the massive bipartisan vote in support of ending it for good.  Similarly, it is now time for Congress to repeal or extend the current moratorium on another tax – the Health Insurance Tax (HIT) – which specifically targets small business plans,” said Kerrigan.

Action on the HIT is Long Overdue

Bipartisan bills have been introduced in the Senate and House that would provide relief for small businesses from the unfair and costly HIT, a $50 million per-day tax that directly targets the plans of small businesses and individual entrepreneurs. The legislation, S. 172 and H.R. 1398, the Health Insurance Tax Relief Act of 2019, would extend the current moratorium on the HIT into 2020 and 2021. Small businesses could save on average $196 per individual and $479 per family, which is significant savings, especially for those with multiple employees.

“The extra cost imposed on the health insurance plans of small businesses because of the HIT cannot be forgotten by Congress, and that is why the House and Senate need to address it right away. If it makes sense to repeal the Cadillac Tax it makes equal or even more sense to repeal or extend the current moratorium on the HIT,” added Kerrigan.

House Moves “Surprise Billing” Legislation  

The House Energy and Commerce voted out a package of bills this week, including the “No Surprises Act.” One surprise was the addition of an “arbitration” amendment into the legislation, which will add complexity, obscurity and costs into the process of the resolving surprise bills.  SBE Council president & CEO Karen Kerrigan joined health care experts on June 25 to voice concern about this approach, as well as in a July 10 letter to Energy and Commerce Committee members. Senate legislation does not include the arbitration language, the White House opposes the approach, and SBE Council will work to keep this bad idea out of any final legislation.

Some Proposed “Solutions” to Drug Costs Will Hurt Innovation

In other areas, SBE Council continues to express concern about the proposed International Pricing Index (IPI) for drugs by the Department of Health and Human Services (HHS), which would bring foreign price controls to the United States. (See SBE Council’s comments on the issue here.)  Over in the Senate, some traction is building on a proposal in the Senate Finance Committee that would impose a financial penalty for Medicare Part D on drug manufacturers if their price increases are greater than inflation.

“This is a government rate control proposal, plain and simple. We have to ask the question: Where would this type of government intervention end? Medicare Part D already includes price increase protections, and the system is working,” said Kerrigan.


Karen Kerrigan


SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 25 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit for additional information. Twitter: @SBECouncil



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