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Groups Band Together To Create Health Plan For Small Businesses

October 8, 2018

Two of Michigan’s leading small business organizations announced the creation of a new health insurance program, known as an Association Health Plan (AHP), that they say could actually lower rates for small businesses.

Rob Fowler, president and CEO of the Small Business Association of Michigan (SBAM), predicted savings “with some confidence of 3 to 5 percent in the first year.”

In the longer term, we will be able to negotiate on behalf of a very large group — and the rates will be based on the experience of the group so it is experience-rated as a group, not each of the companies themselves but the group — so in the third and fourth years, if we have good experience . . . We have talked a lot about the trajectory of health care costs or bending the cost curve. I think we are actually going to bend it down, not just not going up so fast,” he said. 

“Rates have been going up year after year for many years. We are talking about rates going down,” said Jennifer Kluge, president and CEO of the Michigan Business and Professional Association. 

Under an executive order signed by the president in October 2017 reforming the Affordable Care Act and under new rules drafted by the U.S. Department of Labor to implement it, SBAM and MichBusiness joined together to form a nonprofit 501-c6 and create one of the first AHPs in the country, named TranscendAHP. 

An AHP allows small businesses and their employees and self-employed workers to band together by geography or industry to obtain health care coverage as if they were a single large employer. The strength of an AHP is creating negotiating power by creating large risk pools with greater economies of scale. 

Fowler said a key to getting rates as low possible is getting bigger numbers in the plan. 

“Actuaries believe that about 40 percent of the marketplace would do better in an association health plan. Forty percent of Blue Cross’ small group market would be 90,000, that’s employees,” he said. 

“Access to comprehensive health insurance programs continues to rank at the top of small business owners’ concerns. Combined with a tight labor market, our members need options that allow them to compete with much larger companies for the talent they need to be successful,” Kluge said. 

Blue Cross Blue Shield of Michigan and the Blue Care Network was selected as the provider, which will give small businesses access to options that previously had only been available to larger companies. 

TranscendAHP will be available to businesses of between one and 50 employees. There are membership requirements, but the new plan will be ready to start providing quotes this week to businesses interested in signing up for coverage beginning Jan. 1. 

More information about the plan is available at the plans website at 

“We are happy to say that we designed this to benefit the small business community, we also made it open to all independent insurance agents, so we are not competing. We are open to everyone. That’s the whole thing, we are open to everyone and we are not creating more competition. We really want to make this successful,” Kluge said.

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