CHOICE Arrangement Act Provides Small Businesses With Affordable Health Coverage Options

By at 20 June, 2023, 6:27 pm

Dear Member of the U.S. House of Representatives:

Policies that improve affordable access to health care and coverage, and ones that deliver certainty, flexibility and knowledge about options are desperately needed by small business owners and their employees. Therefore, the Small Business & Entrepreneurship Council (SBE Council) urges your support of the CHOICE Arrangement Act (H.R. 3799) when it comes to the floor for a vote this week.

According to SBE Council’s recent survey on the state of health care and small businesses, the barriers to providing health coverage continue to squeeze small firms, as a large portion of the small business community reports that high costs, annual and unpredictable increases in costs, lack of choices, and limited buying power are hurdles that prevent them from offering health coverage.

For 2023, prices only went higher. Many of our small business members report increases in the 5%-20% range. Such year-over-year cost increases have proven to be unsustainable for small businesses. Steep costs and rising premiums are why many small businesses simply cannot afford to offer health insurance benefits, making it difficult to compete for employees. Therefore, and not surprisingly, it is estimated that 97% of businesses with more than 50 employees provide coverage for their workers while the offer rate is only 31% for businesses with less than 50 employees.

The CHOICE Act includes various measures that will help small businesses navigate the marketplace and identify options for their firms and employees.

Small Business Flexibility Act. This measure would require the U.S. Treasury Department to educate employers about the availability of tax-advantaged flexible health insurance benefits. The initial focus of this outreach would be targeted to small businesses. Various coverage options – such as ICHRAs, QSHRAs, and the Small Employer Health Insurance Credit – could experience a significant uptake in usage if more small business owners learned about this option. While SBE Council continues to advocate for additional reforms to enhance this option, boosting educational efforts is an important step in providing small businesses more information about the affordable choices that are available to them.

Custom Health Option and Individual Care Expense Arrangement Act. This provision would amend the Internal Revenue Code of 1986 to provide for health reimbursement arrangements integrated with individual health insurance coverage (with certain modifications). Codification will serve to promote usage and adoption, while clarifying the statute governing this option for coverage.

Association Health Plans (AHPs) Act. A properly constructed framework governing AHPs would allow small businesses to experience the same market power that larger companies enjoy in negotiating coverage plans and prices. Current AHPs can be made much more effective by allowing more and different types of AHPs to pool risk and negotiate lower costs, including nationwide AHPs. The bill fixes complex and costly rules that are prohibiting small businesses from effectively pooling, and the outcome will mean more small business coverage for employees who need access to health care.

Self-Insurance Protection Act. Self-funded plans should continue to be an option for all small businesses, and many began utilizing this flexible/affordable option until states began erecting regulatory and legal roadblocks. The legislation protects this option for small businesses by clarifying ERISA with respect to these plans. Again, more choices such as self-funded plans will result in more workers covered, a level-playing field for small businesses, and better health-care outcomes for our nation.

Small business owners want to do the right thing and offer health coverage for employees. In fact, according to SBE Council’s health care survey, when asked to identify the biggest benefit of providing coverage, the number one response was that small business owners wanted to help employees maintain their health and wellbeing. Policies need to help small business owners do that, rather than getting in the way or driving costs higher. The CHOICE Act is an important legislative step toward bringing more affordable choices to the market for small businesses, and SBE Council strongly urges every member of the U.S. House to support its passage.


Karen Kerrigan, President & CEO

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