If set up right, the new health insurance marketplaces will be able to organize individuals and small businesses into larger groups that are able to negotiate for better deals.

State legislators face an important decision in implementing the Affordable Care Act. Will they set up the new state-based insurance marketplaces to bring consumers together to negotiate with insurance companies for a better deal – or will they elect not to.

Already 10 states have enacted legislation to establish new insurance marketplaces and another 34 are considering legislation. States have flexibility over several key aspects of how the marketplace will operate.

For small businesses, farmers and ranchers and the self-employed, one of the most important decisions is whether the new marketplaces will help them come together in a larger pool to negotiate better rates.

Big employers do this now. Big corporations, and even state governments, leverage their large group of employees to get a better deal on insurance. For farmers, farmer-owned cooperatives are another example of large numbers of individuals banding together to strengthen their business position. But, for too long, individuals and small businesses have gotten a raw deal on health insurance because they lack similar market clout.

If set up right, the new health insurance marketplaces will be able to organize individuals and small businesses into larger groups that are able to ne¬gotiate for better deals.

This is especially important to making the exchanges work for small business. For a family of four making less than $88,000 a year, a new tax credit will help make insurance premiums more affordable. But for small businesses, the tax credits are only transitional. The long-term benefit of the Affordable Care Act for small businesses is the prospect of finally being able to band together with other businesses to demand a better deal from insurance companies.

Unfortunately, some states are considering tying the hands of administrators of the new health insurance marketplaces. They would prevent them from leveraging the large pool of new enrollees to negotiate a better deal from insurance companies. Such a move would leave the market dominance of large insurers unchallenged.

For too long rural people, farmers and ranchers and small businesses who buy coverage in the individual market have been denied the benefits large employees can demand. By enacting strong legislation that puts consumers and small businesses ahead of giant insurance companies, states can begin to make the insurance marketplace a fair arena for all.

If you want to get involved in this issue in your state, call or email me, Brian Depew, at briand@cfra.org or 402.687.2103, ext. 1015.