A Solution to Rising Healthcare Costs: The franchise model is uniquely suited to implement AHPs.

Author:Beall, Suzanne

While the most common source of healthcare coverage in the United States remains employer-sponsored, a smaller proportion of people are covered by employers than a decade ago. In fact, recent studies have shown that 36 percent of small employers with less than 10 employees have dropped coverage altogether during the period between 2008 and 2015. This is because insurance companies charge higher rates for smaller risk pools. Small-group market rules under the Affordable Care Act make it more difficult for small businesses to provide affordable health insurance without the purchasing power of a large group. A new proposed regulation by the U.S. Department of Labor can mitigate these trends, especially if DOL looks to the franchise business model as a tool for increased access to affordable care.

The franchising model is perhaps the best example of how economies of scale can be utilized to make the delivery of products and services more affordable for small business owners, the independent, local franchisees, and those businesses' customers. Last October, members of IFA's Board of Directors witnessed first-hand President Trump's signing of an Executive Order that eases rules to allow small businesses to band together and create Association Health Plans that could form across state lines.

Subsequently, on March 6, IFA submitted comments to DOL in support of the proposal and urged DOL to expand the definition of "employer" under the Employee Retirement Income Security Act of 1974 to allow for those employers with a "commonality of interest" through the franchising business model to be included in the final rule. IFA shared with DOL that the structure and experience of the franchise model makes it uniquely suited to implement and manage quality AHPs. Franchises can effectively utilize AHPs through their intra-band...

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