A new health care reform initiative announced Tuesday by the U.S. Department of Labor could change the way real estate professionals and other small business owners get health care coverage, while simultaneously weakening protections in the Affordable Care Act (ACA), a.k.a. Obamacare, the national health care marketplace launched under the Obama Administration.
The reform will modify the legal definition of “employer” to include “working owners” — i.e., self-employed individuals with no employees — and will allow small businesses and independent contractors, such as real estate agents and Realtors, to band together based on location or industry to strengthen their buying power into association health plans (AHP).
These plans would be governed by the same rules as private employer policies, not ACA rules, which means potentially cheaper coverage than what’s available in the ACA marketplace, but also potentially weaker protections.
“President Donald J. Trump is expanding affordable health coverage options for America’s small businesses and their employees,” U.S. Secretary of Labor Alexander Acosta said in a release. ”Many of our laws, particularly Obamacare, make health care coverage more expensive for small businesses than large companies.”
“AHPs are about more choice, more access and more coverage,” he added. “The President’s decision helps working Americans — and their families — purchase quality, affordable health coverage.”
The National Association of Realtors (NAR) also applauded the reform, noting that it had long been, “advocating for independent contractors’ right to pursue coverage through AHPs.”
“America’s self-employed, including real estate professionals, may now have the opportunity to purchase health insurance through a group health plan, taking advantage of economies of scale that may improve access to care while also receiving critical flexibility to choose between their spouse’s plan and an AHP,” said NAR President Elizabeth Mendenhall, in a statement.
In a public Facebook post, NAR CEO Bob Goldberg said there will likely be legal challenges to overcome and many states have already announced opposition to the reform.
The decision could potentially pave the way for NAR to create an AHP for its self-employed members, but that’s still far in the future, according to Goldberg.
“There is much research to be done to determine whether NAR can find an insurer who is willing to partner with NAR to offer the quality coverage we would want to offer to NAR’s members,” Goldberg posted on Facebook. “NAR wants to caution our members that the development of an AHP will be a long process and may not meet the health insurance coverage needs of all members. We have already begun that work with experts in this field, so we are off to a running start.
As many as 46 percent of NAR’s 1.3 million members reported paying for their health insurance out of pocket while 32 percent said they were insured through a spouse, partner or family member, according to a profile of the group’s members from 2017.
In January, Arizona-based real estate franchisor HomeSmart announced a unique partnership with a human resources company to offer its 14,000 agents a health insurance program through a new group buying initiative, which could look similar to AHPs.
Critics of the plan have pointed to past troubles with AHPs and the adverse effect that this ruling could have on the health care marketplace.
“This proposed rule could significantly impact the individual and small group health insurance markets, by permitting the segmentation of healthier individuals and groups into lower cost plans, which could increase costs and reduce access to coverage options for those left behind,” said Richard Besser, the president and CEO of the public health philanthropy, Robert Wood Johnson Foundation, in a public comment back in March. “Further, AHPs have a troubled financial history, replete with many examples of insolvency and fraud.”
Barring potential legal challenges, the rule will go into effect 60 days from today.