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Association Health Plans to expand under final rule

AHPs offer a less expensive alternative that is expected to draw healthier consumers away from the Affordable Care Act market.

Susan Morse, Senior Editor

America's Health Insurance Plans was quick to react to the Trump Administration's final rule on Tuesday allowing for the expanded use of Association Health Plans.

On Tuesday, the Department of Labor issued its final rule that follows through on President Donald Trump's executive order in October 2017 promoting healthcare choice and competition.

The rule allows small businesses and self-employed individuals to band together to buy health insurance. AHPs allow employers in a state, or in the same industry across state lines, to gain the regulatory advantages of larger employers in purchasing insurance.

Association health plans could lead to fewer insured Americans, higher premiums for those who remain in the Affordable Care Act market and put consumers who get an AHP at risk of fraudulent action by new groups entering the field, AHIP said by statement, as the insurer organization starts its annual Institute & Expo this week in San Diego.

"Every American should be able to get comprehensive healthcare coverage they can afford, and we support the goal of increasing competition and choice in ways that improve affordability," AHIP said. "However, we remain concerned that broadly expanding the use of AHPs may lead to higher premiums for consumers who depend on the individual or small group market for their coverage. Ultimately, the rule could result in fewer insured Americans and may put consumers at greater risk of fraudulent actors entering this market."

Unlike coverage in the ACA, AHPs can tailor plans by benefit design.

They offer a less expensive alternative that are expected to attract healthier consumers who don't need the essential benefits mandated by the ACA.

One of the oppositions to AHPs is that these plans would further destabilize the ACA market. Numerous insurers have left and those that remain face operating without cost-sharing reduction payments and a close to non-existent promotional and Navigator budgets to help enrollees.

AHPs would encourage healthier ACA consumers to leave for less expensive plans, leaving the exchange market with riskier, higher cost enrollees and even greater premium increases.

Safeguards however are in place in the final rule to ensure consumers who have pre-existing conditions do face discrimination, according to the rule. Additionally, states will continue to share enforcement authority with the federal government.

But the Congressional Budget Office estimates that millions of people will switch their coverage to the more affordable and more flexible AHP plans and save thousands of dollars in premiums.

The CBO also estimates that 400,000 previously uninsured people will gain coverage under AHPs.

Association Health Plans will address many of the inequities between small and large businesses in access to  coverage, the Department of Labor said.

AHPs will also be able to reduce administrative costs and strengthen negotiating power with providers from larger risk pools and greater economies of scale, it said.

For many, the Affordable Care Act is unaffordable as premiums have more than doubled between 2013 and 2017 and deductibles have also increased, the department said by statement.

"AHPs are about more choice, more access, and more coverage," U.S. Secretary of Labor Alexander Acosta said. "The President's decision helps working Americans – and their families – purchase quality, affordable health coverage."

The new rule does not affect previously existing AHPs, which were allowed under prior guidance. New plans can also form and elect to follow either the old guidance or the new rules.

Twitter: @SusanJMorse
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