There are promising benefit and cost trends among 28 association health plans, or AHPs, recently launched in 13 states, data released by AssociationHealthPlans.com shows.
The analysis, which offers insights about how the market is responding to a new Department of Labor regulation finalized in June 2018, shows a trend toward comprehensive benefits and double-digit cost savings -- although controversy remains surrounding AHPs, particularly when it comes to consumer protections.
The Department of Labor regulation, which is being implemented in stages, makes it easier for small employers to band together to offer lower-cost "large company" health insurance. The breadth of benefits had been one of the biggest concerns among detractors of association-based insurance.
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Yet according to the analysis, no evidence of narrow benefit designs was observed in the new AHP benefit descriptions. And advanced features such as health savings accounts also have a strong presence among the new plans.
Regional associations launched 71 percent of the new AHPs, the data showed. Employers in an association health plan must share a professional similarity or the same business region; the most common sponsors for regional associations were chambers of commerce, which sponsored four out of five regional associations.
Major industry players are pretty heavily involved. Among new AHPs, 86 percent are insured by a third party as opposed to being self-funded. UnitedHealthcare and Blue Cross Blue Shield insurers are the most common companies in this emerging market and collectively provide 75 percent of coverage for AHPs that don't self-fund.
Meanwhile, 43 percent of new AHPs are available to sole proprietors and the self-employed. One of the major changes to association health insurance under new regulation is its ability to cover self-employed individuals who are not part of a business with other employees.
Multi-state AHPs are taking longer to enter the market, likely due to the additional preparation and insurance filings involved in multi-state AHPs. Half of new AHPs include a medical savings account option such as an HSA.
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States with new association health plans include Texas, Florida, Ohio, Georgia, Michigan, Wisconsin, Minnesota, Alabama, Oklahoma, Nevada, Nebraska, West Virginia and Vermont. The final rule will be implemented in April.
Not everyone is thrilled with the concept of association health plans.
In July, 11 states and the District of Columbia sued the federal government over its proposed final rule to allow for AHPs that get around the ACA's mandate to provide essential benefits.
The lawsuit alleges that consumers will have less coverage and fewer benefits than Congress intended, and the rule will destabilize the individual and small group markets with premiums that may be unaffordable.
Last week, U.S. District Court Judge John Bates questioned Trump administration lawyers about association health plans after Democratic state attorneys general asked him to strike down the rules allowing for them. The attorneys general contend the new AHP rules violate Affordable Care Act provisions as well as the Employee Retirement Income Security Act, or ERISA, according to benefitnews.com.
The American Medical Association, the American Hospital Association and others are also in opposition.
In June 2018, the Department of Labor proposed a final rule that establishes more flexible criteria under ERISA for determining when employers may join together in a group to form association health plans. AHPs expand access to affordable health coverage, especially for employees of small employers and certain self-employed individuals, according to the final rule.
The Affordable Care Act mandates that all individual and small group plans cover 10 essential health benefits. Association health plans would not be subject to these consumer protections.
America's Health Insurance Plans warned after the rule was issued that AHPs could lead to fewer insured Americans, higher premiums for those who remain in the ACA market and could put consumers who get an AHP at risk of fraudulent action by new groups entering the field.
The states that brought the lawsuit include New York, Massachusetts, California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, Virginia, Washington and the District of Columbia.