Senate Bill 1011 Is a Practical Tool That Addresses Health Care Coverage Cost Relief

In 2023, SBAM’s Board of Directors convened an Ad-hoc member task force to rewrite our health care policy position from the ground up. At that point nearly three years ago, small business owners were coming off a string of premium increases stretching back more than twenty years, and it was clear that few issues mattered more to the future of small business. For our Advocacy Team to be the voice of small business in Lansing, we needed an up-to-date policy position built on what owners were actually experiencing. The group, chaired by veteran insurance agent Shannon Enders, produced a report that got to the heart of the issue and didn’t pull punches.

Most premium cost drivers are stubborn, behemoth issues – hospital consolidation, gaps in accountability and transparency, patent abuse, and rigid rules determining how businesses can offer benefits. The complexity of these issues causes state lawmakers to throw their hands up in frustration, and has led to more than one, “What can you expect us to do about it?”

Since we published that report, the problem has only gotten worse. In recent member surveys, about 80% report double-digit increases year-over-year, adding thousands of dollars per employee. The hardest-hit small groups are seeing single-year premium jumps above 25%. Three in four respondents say increases are already limiting their ability to hire, and half have had to cut back or drop benefits entirely. More than 40% told us that if costs continue to climb the way they have been, they will consider dropping coverage entirely within three years. Small business owners are reaching a breaking point.

Unfortunately, most owners don’t have many levers to pull. Large employers have enough workers to form their own insurance risk pool, which lets them design their own benefits, run wellness programs that manage utilization and lower costs, and negotiate directly with carriers, shielding them from the premium volatility that hits small businesses the hardest. Small companies cannot combine their employees with another company in a single risk pool under most circumstances, but SBAM is trying to change the law to make this option more accessible.

We have experience with this option. In 2018, a short-lived change in federal administrative rules let us stand up an association health plan. For the brief window it was online, it gave hundreds of employers and thousands of employees access to affordable coverage with significant savings compared to traditional small group plans. When the rule was struck down, the plan wound down, too, eliminating real flexibility and real savings. Since then, SBAM has advocated for association health plans to return – it was a central piece of our 2023 task force report, but general inaction in D.C. has stifled progress on a federal fix through Congress.

However, in the last few years, we’ve started to see states change their own laws to create association health plans on a state level, so SBAM began to investigate. SBAM’s Health Care Policy Council met with a representative from the North Carolina Chamber to talk about how their state leveraged their authority to pave the way for state-regulated association health plans. SBAM staff met with Michigan’s insurance regulators and discussed plan intricacies with legislative leaders. The result of this work is Senate Bill 1011.

Senate Bill 1011 allows Michigan-based small businesses (and even sole proprietors) to band together, across industries, through a trusted association and combine their employees into a single pool, structured as an association health plan. By allowing cross-industry pools to form based on geographic commonality, the bill gives small employers the same purchasing power and benefit design leverage that large companies already enjoy. And unlike in 2018, this change would be grounded in Michigan law.

Through our work on SB 1011, we made it a priority to set the bar high to ensure that flexibility does not come at the expense of quality. Every pool formed under the bill is required to cover all Affordable Care Act essential health benefits – mental health services, maternity care, preventive services, and dependent coverage. Pools can only rate members on neutral factors – never health status or claims history. Every plan and qualifying association is licensed, scrutinized, and audited by the Department of Insurance and Financial Services with reserve and solvency requirements.

The bill also includes a targeted, state-backed reinsurance layer to soften the impact of catastrophic claims. Very large claims can completely wipe out a young pool, so the state absorbing part of the risk for some of those claims makes it realistic for an association to get a pool off the ground in the first place. Even while checking every possible box for consumer protections, we Powered By believe this bill will create plans that demonstrate real savings versus similar small group plans, and create an option for sole proprietors unlike anything on the market.

So far, state lawmakers agree. Senate Bill 1011 cleared the Michigan Senate on a unanimous 35-0 vote – a resounding, bipartisan signal from lawmakers that they’re hearing the same things from their local businesses that we hear from our members. The bill awaits further action in the House of Representatives. SBAM’s Advocacy Team is in active conversations with the Administration and House leadership, making the case that SB 1011 is a practical tool that addresses an urgent need.

Senate Bill 1011 is not a silver bullet. The massive cost drivers causing the baseline health care costs to skyrocket still exist, and we’re working hard to keep them in check, too. However, for small businesses that are left wondering if they can continue to afford benefits for their employees, this creates an alternative that comes with real, meaningful savings.

By Jacob Manning, SBAM’s Advocacy & Policy Manager; originally published in SBAM’s September/October 2026 issue of FOCUS magazine.

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