NC legislature to pass small business health plans

Trump executive order on plans tied up in courts

Fair use: Dept of Labor

RALEIGH — Senate Bill 86, Small Business Health Care Act, passed 82-32 in the House on Aug. 7 with backing from major state business organizations seeking more affordable ways for their members to provide coverage to employees. The bill saw significant bi-partisan crossover support, with 19 House Democrats voting for the Republican-sponsored legislation. 

Under the Affordable Care Act, commonly known as Obamacare, employers provide health insurance to their workers either in the small group market, if they have 50 or fewer employees, or in the large group market, if they had over 50 employees. Those in the small group markets included many sole proprietors, independent contractors and small businesses.  

According to backers of the bill, like the N.C. Chamber of Commerce, the N.C. Realtors and the N.C. Retail Merchants Association, their members were complaining that coverage was more expensive for them because they, unlike those in the large group market, were required to provide the “10 Essential Benefits” mandated by the ACA. They also claimed that their ability to negotiate with insurance companies for more affordable plans was limited due to their size.  

At the press conference announcing the final version of the bill and its likely passage, House and Senate members of both parties gathered in the media room at the legislature, along with small business owners and representatives from trade associations who had backed S.B. 86.  

“We have a lot of small business people who employ between five and twenty-five people,” Richard Greene, executive director of the North Carolina Craft Brewers Guild, said at the sponsors’ press conference. “Their biggest issue is to be able to attract employees, retain them, and provide a decent living that includes health care. I want to thank the legislators for their hard work on this bill. This is a very critical piece to our businesses.” 

A concern of those who opposed the bill is that moving large numbers of people from the small group market to the large group market will siphon off healthier, younger enrollees, making coverage for those remaining more expensive. They also oppose the ability of Association Health Plans to avoid covering those 10 Essential Health Benefits, which include things like maternity care and substance abuse treatment. Without these benefits, those opposed worry that employers would just be saving money by providing their workers with insufficient coverage.  

A Democrat-introduced amendment to S.B. 86 would have required the plans to continue providing these benefits but was voted down before the bill passed.  

The viability of the bill relies on an executive order by President Trump directing the U.S. Dept. of Labor to expand the definition of “employer.” The executive order would allow many smaller employers to band together in associations and be considered as one “employer” for the purposes of providing health coverage.   

The executive order was invalidated in March of 2019 by U.S. District Judge John D. Bates, leaving S.B. 86’s future tied to an appeal of this decision to a higher court. The court agreed with the 11 states and Washington, D.C. who brought the case in their argument that “DOL’s Final Rule stretches the definition of “employer” beyond what ERISA’s [the Employee Retirement Income Security Act of 1974] text and purpose will bear.” 

“[T]hat is just the opinion of one federal judge and that decision is being appealed,” Bill D’Elia, a spokesperson for Senate Leader Phil Berger (R-Eden), told NSJ. “We are confident that appeal will be successful and as a result we are moving forward with this important legislation to provide small businesses a cost-effective option to offer their employees high quality health insurance plans.” 

Speaker Tim Moore’s (R-Kings Mountain) office agreed with the Senate leader. In a statement to NSJ, Joseph Kyzer, Moore’s communications director, said, “We do expect a successful appeal of court rulings that might prevent continued and successful collaboration among North Carolina associations seeking to lower costs and improve care for their industries’ employees.”  

The bill, which originated in the Senate, was sent back to that chamber for a concurrence vote. Both Moore and Berger’s offices said there was agreement on changes from the original bill, so they did not expect to hit any roadblocks on the final vote, which according to D’Elia, will be this week.