This year, Congress has difficult decisions to make. Right now, they are in the middle of a heated debate over government funding and desperately trying to find a way out of the current shutdown. As we draw closer to the end of 2025, Congress may be presented with an opportunity to advance small business healthcare reform and give small businesses relief from surging healthcare costs.
For over 40 years, healthcare has been the top problem facing small businesses. Congress has repeatedly sought to “fix” this problem. Instead of helping, Congress has often just placed a Band-Aid over a deep wound, leading to fewer options and increased costs.
Proposed Solutions for Affordable Coverage
These systemic issues were created over decades and will not be fixed in a day. However, Congress can make changes to start addressing these long-standing issues.
To start, Congress should codify Individual Coverage Health Reimbursement Arrangements (ICHRAs) into law. Since being created through an IRS regulation during the first Trump Administration, these tax-advantaged plans have allowed small businesses to set their budget for what they can afford to contribute to their employees’ health coverage while giving the employee the freedom to choose the health plan that best fits their needs. This is a win-win, as it gives the employer affordability and the employee flexibility.
On top of this, Congress should expand access to affordable coverage options. The way to do this is through freeing insurance products from one-size-fits-all federal mandates and allowing entrepreneurs the ability to structure health benefits that meet the needs of their employees.
Specifically, Congress should increase opportunities for small businesses to join with other businesses to provide group health coverage. These arrangements, known as Association Health Plans (AHPs), allow small businesses to use bargaining power in the same way larger businesses are able to. Current law limits AHPs by preventing groups from forming across industries, making it harder for small businesses to access this option.
Congress can also legalize insurance plans that do not cover everything and the kitchen sink. These plans could then be paired with a direct primary care (DPC) membership to provide robust coverage of emergencies and everyday needs. The beauty of a DPC membership is that an individual can pay a monthly membership and have unlimited visits to the physician. Compared to the massive health insurance deductibles that small businesses are currently paying, DPC memberships are a bargain.
Tackling Industry Consolidation and Transparency
Additionally, Congress must address the policies that are fueling industry consolidation, like the ACA’s cap on profits known as the medical loss ratio (MLR). The MLR has ignited the rapid growth and consolidation of hospitals, insurance companies, and pharmacy benefit managers (PBMs). I would argue that few Members of Congress knew what a PBM was prior to the passage of the ACA. However, the MLR has changed that and harmed local, independent pharmacies in the process.
Congress must get serious about this industry consolidation, but also the opaque nature of payments. Nine out of every 10 dollars spent on healthcare flows through a third party, be that an insurance company, government program, etc. The patient is almost entirely detached from the cost of care; it’s no wonder that costs are exploding. Increasing transparency and accountability, like requiring site-neutral payments or prohibiting PBM spread pricing, must be enacted if costs are to be lowered.
Empowering Small Businesses Through Reform
For too long, politicians have adopted a “Washington knows best” top-down approach to small business healthcare reform. Real reform means giving small businesses the tools they need by freeing healthcare from burdensome mandates. It means returning the decisions to the American people, who know their individual needs better than the politicians and bureaucrats in Washington.
Are our lawmakers up to the task? Only time will tell.
TYLER DEVER is a principal, federal government relations, at the National Federation of Independent Business.
