Tucked inside the North Carolina General Assembly’s Hurricane Helene recovery bill is a small provision that will mean big things for businesses in the state.
Under the provision, small businesses will now be able to come together under an umbrella organization like the North Carolina Chamber to purchase health insurance.
This will allow several small businesses to essentially function as one large business and purchase health coverage together as one entity.
In insurance terms, they will be able to purchase “large group” coverage instead of “small group” coverage.
The reason this is such big news is that “large group” health insurance is significantly less expensive than “small group” coverage.
This is due to several factors.
First, large businesses have more employees, so they can spread the cost of paying claims around to a larger base of individuals. When the risk pool is bigger, premiums do not have to be as high to cover claims. Since more people pay in to the insurance pool, everyone can pay less to cover the cost of care for the group.
Second, large businesses are not subject to the same coverage mandates as small businesses. Mandates make insurance more expensive. When small business can join together and purchase insurance as a large business, they are not subject to those mandates that drive up premiums.
Third, large businesses have greater negotiating power with insurers because of their large customer base. They bring more customers to the table so they can demand better deals.
Health insurance costs for small businesses in North Carolina are so high that one survey found nearly eight out of 10 do not even offer coverage to their employees.
76 percent said that healthcare costs hurt their ability to grow, hire and offer goods at lower prices to consumers.
This legislation will go a long way in making sure small businesses can provide affordable health insurance for their employees.
The downstream effect of that is more jobs, stronger economic growth, and lower prices for consumers.
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