Va. chamber to offer small biz health coverage

Finding affordable health insurance has long been a difficulty for small business owners and employees.

Premiums may be affordable one year and could double the next. In 2020, Virginia’s average health insurance cost per person was $8,815, according to data from the Kaiser Family Foundation, and 36.1% of people polled reported that they did not seek mental health treatment because of cost. The average monthly cost of health insurance for small business owners is $547 per employee, which rises to $1,175 for family coverage, Kaiser reported in 2021.

The federal Affordable Care Act, passed in 2010, helped self-employed Americans negotiate affordable health policies, and in 2022, Virginia’s lawmakers passed legislation that aims to make similar strides for small businesses.

Small businesses with two to 50 employees will soon be able to join a self-funded health insurance consortium, or Multiple Employer Welfare Association (MEWA), through their local chamber of commerce or other business organization, such as the Virginia Farm Bureau. The ultimate aim is to lower the cost of insurance per person by creating a larger risk pool.

“I think this could be a game changer for small business,” says state Sen. Monty Mason, D-Williamsburg, one of the legislation’s sponsors. He predicts MEWAs will help small businesses attract more employees, noting that “80% of new jobs are offered by small businesses” in Virginia. “Other states that have these types of consortiums have seen premiums [go] down by 15% to 20%.”

According to state law, no one can be excluded from a MEWA based on preexisting health conditions, and insurance policies must cover emergency care, hospital stays, prescription drugs and other expenses typically covered by insurance. Any surplus revenue will be sunk back into the insurance plan at the end of the year, and associations must maintain a net worth of at least $4 million and deposit at least $50,000 of high-quality securities with the Virginia Department of the Treasury.

The first organization in the state expected to offer such a plan is the Virginia Chamber of Commerce, which is set to roll out its WiseChoice Healthcare Alliance this summer. Barry DuVal, the chamber’s president and CEO, says he anticipates about 3,000 people will join join in the first year — “similar to health coverage for a big company.” The only requirement for membership is that a business join a local chamber affiliated with the Virginia Chamber. Premiums will differ per business, DuVal notes.

The State Corporation Commission’s Bureau of Insurance will oversee the consortiums — as of May, the bureau had not yet received any applications for approval, but a spokesperson says it expects one soon from the Virginia Chamber. Any organization planning to create a MEWA must submit a three-year financial feasibility plan with enrollment projections, a methodology to determine premium rates, as well as a projection of balance sheets, cash flow statements showing capital expenditures, and purchase and sale of investments, the SCC says.

“We worked so closely with the Bureau of Insurance,” Mason says, “I think the structure is as sound as it can be.”

Mason’s first try at passing the legislation in 2019 was vetoed by Gov. Ralph Northam, who was concerned the bill would lower membership in the state insurance exchange.

“We argue that it would not hurt the state exchange,” DuVal says. Northam’s successor, Gov. Glenn Youngkin, a Republican, said before taking office in January 2022 that he would sign a bill if it were passed again by the Virginia General Assembly. He did so at a ceremony last year. 

Aside from stabilizing the cost of health insurance, DuVal says MEWAs will likely help boost membership in local chambers. Similar policies in other states have helped chambers grow, with health insurance consortiums including up to 40,000 members after a year or two in existence. Mason anticipates Virginia’s consortiums will include 10,000 to 20,000 people once they’ve existed for a couple of years.

“Ninety percent of Virginians work for small businesses,” DuVal notes. “The real benefit of this is to produce and promote a healthy Virginia. It also helps smaller businesses recruit. Now they can offer competitive health coverage for employees.” 

Read more: Cybercriminals present slippery challenge to insurers