America’s health insurance system is pricing out the very people who drive our economy: small business owners and the self-employed. Now, a bill before Congress has a chance to reverse the trend created by Obamacare and other government interventions by expanding Association Health Plans (AHPs), thereby allowing small businesses and non-profit organizations to join together and offer affordable health insurance. Now, in a newly released report, The Goldwater Institute is urging free-market leaders to support this long-overdue reform.
Local business owners, freelancers, and many entrepreneurs face a major health insurance challenge: increased premiums, more cost sharing requirements and decreased value for the dollars they’re paying to insurance companies. The rising cost of providing health insurance is forcing small businesses to make tough decisions to survive, including eliminating raises, slowing hiring, increasing prices, and shifting full-time roles to part-time. While the left calls for more government, a better path lies in the free market. AHPs rely not on mandates or subsidies, but on cooperation and economic common sense. Now, with H.R. 2528, introduced by U.S. Representative Tim Walberg, Congress has a chance to codify this free-market reform, expand access, and bring long-overdue regulatory clarity to America’s small business community
The cost of health insurance has become a major obstacle to American entrepreneurship, according to research by The Goldwater Institute. Over the past two decades, small firms have been priced out of the market. Between 2002 and 2021, the share of small employers offering health coverage plummeted by 28 percent. For those holding on, costs soared—single coverage premiums rose 118 percent; family plans by 140 percent, causing business owners to face difficult choices. By 2022, more than half of small business owners surveyed had considered dropping coverage entirely. Many froze hiring, cut staff, or reclassified jobs just to stay afloat.
For those who work as independent contractors, nearly 50 million strong, the picture is even bleaker. Most have no access to employer-sponsored insurance at all.
AHPs offer a simple but powerful solution: allow small businesses, non-profit organizations, and self-employed Americans to band together and purchase health insurance as a group. By joining together, they can broaden risk pools, access economies of scale, and gain the bargaining power typically reserved for large corporations. This approach not only reduces premiums but also expands choice. That offers relief from the one-size-fits-all mandates of Obamacare, which have driven up costs and constrained options for small employers. Under the Employee Retirement Income Security Act (ERISA), AHPs operate more like credit unions than government programs, empowering diverse businesses or even sole proprietors to obtain affordable coverage.
When the Department of Labor broadened AHP eligibility in 2018, the early results were striking: double-digit premium drops within months, no spike in adverse selection, and no destabilization of the individual market. But litigation froze the rule, and with it, the opportunity to build a real alternative to the collapsing status quo.
Meanwhile, nothing has changed. Small employers keep losing options and racking up costs as the individual market remains narrow and expensive. The gig economy thrives, but its workers remain locked out of employer-backed plans. This is a government-induced failure begging for a market solution, and the free-market movement should step in to voice support.
The time to act is now. Association Health Plans don’t require a new entitlement or a dime of new federal spending. They rely on cooperation, not coercion. They reward initiative and restore choice. They represent the very best of market-driven reform. At the Goldwater Institute, we believe in expanding opportunity through liberty. AHPs do exactly that. We call on our allies—state policy leaders, advocacy groups, and free-market scholars—to join us in backing H.R. 2528 and championing real choice in health care.
Learn more and read our newest report about Associate Health Plans here.
Carl Paulus is a Senior Writer for the Goldwater Institute.
