Texas Gov. Greg Abbott unveiled a proposal in Fort Worth that would allow employers to offer group health insurance meeting all federal requirements without state-specific benefit mandates. The Texas Association of Business (TAB) endorsed the plan on August 3, according to a report by Texas Border Business. The proposal targets a small employer market where only 27% of Texas businesses currently provide health coverage, a figure TAB described as declining.
For benefits brokers in the Texas small employer market, the proposal signals a potential new product category where cost has pushed many employers out.
Texas ranks third among US states for health insurance mandates exceeding ACA requirements, according to the Texas Association of Health Plans (TAHP). That burden falls disproportionately on small employers. Four out of five Texas workers with employer coverage are in federally regulated ERISA plans exempt from state mandates. Those workers pay roughly 19% less for comparable benefits, according to TAHP.
The remaining three million workers are in small or mid-size employer plans subject to every state requirement. Abbott's office projects the mandate-light option could save Texas families about $1,145 annually, according to Texas Border Business. It also projects savings of more than $3,400 per employee each year for small businesses. Those figures come from the governor's office and have not been independently verified.
TAB said rising insurance costs have put small employers in a difficult position, with many choosing between providing health coverage and investing in business growth. Texas has the highest uninsured rate among US states at 16.6%, according to Texas Border Business. TAB said the proposal addresses a coverage access problem tied directly to cost.
"Texas employers have consistently made clear that the growing number of state health insurance mandates is driving up costs and undermining our state's otherwise pro-business environment," said Gabriela von zur Muehlen, senior vice president and chief policy officer at TAB.
The proposal preserves all 10 federally required Essential Health Benefits under the Affordable Care Act. Employers could choose to forgo state-specific mandates beyond those 10. The plan would be optional, and employers could still purchase fully mandated policies.
If the proposal advances in the 2027 legislative session, benefits brokers in Texas would gain a new lower-cost plan category. A mandate-light option could give brokers a tool to re-open conversations with employers who dropped coverage or never offered it.
The proposal builds on prior legislative activity. TAB said it supported House Bill 139 by Rep. Jay Dean during the 89th Texas Legislature, which would have established an optional employer-choice plan on the same federal EHB-only premise.
No legislative text has been filed for 2027, and the savings projections originate from the governor's office rather than an independent actuarial review. State mandates that would become optional under the plan may include coverage employees currently rely on. That tradeoff will be central to any plan comparison a broker presents to an employer client.
