Trump Administration Unveils Association Health Plans Final Rule

Labor Secretary Alexander Acosta

Labor Secretary Alexander Acosta

A number of congressional Democrats criticized the new rule Tuesday as the Trump administration's latest attempt to undermine Obamacare, officially known as the Affordable Care Act.

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Currently, federal regulations require that members of AHPs be in the same industry and that they be involved in the day-to-day decision-making of a business, and only about one-half of small businesses offer employer-sponsored health insurance.

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In midday remarks before the National Federation of Independent Business, which supports the changes, Trump spoke in his trademark hyperbole, saying, "You are going to save massive amounts of money and have much better health care". America's Health Insurance Plans (AHIP) put out a statement with some reservations, noting that the rule could "lead to higher premiums for consumers who depend on the individual or small group market for their coverage" and "may put consumers at greater risk of fraudulent actors entering this market" (see AHIP Comments on Final Rule Expanding the Use of Association Health Plans). Numerous plans will be subject to the same rules as larger employers, which means they won't have to provide comprehensive benefits, such as maternity services, prescription drugs, or mental health care, mandated under the ACA.

These plans would likely have lower premiums, but they would also provide fewer benefits - which could leave sicker and older workers out in the cold.

"Because association health plans might appear like regular insurance but typically offer narrow coverage, many consumers who buy them will discover that they have astronomically high medical bills for charges they assumed would be covered by their health insurance", Isasi said. Business owners without employees have traditionally been excluded from ERISA's group health plan provisions, but the rules now allow them to join AHPs as employers, and participate in the plan as employees. "This expansion will offer millions of Americans more affordable coverage options". Such plans can continue to operate as before, or elect to follow the new requirements if they want to expand within a geographic area, regardless of industry, or to cover the self-employed. The NC Department of Insurance is also working to learn how the new rule could impact North Carolinians. Today, the Department finalized that rule, providing more affordable, quality health coverage options to hardworking citizens in our states.

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Avalere Health, a Washington-based consulting firm, estimated last winter that the rules would lead to lower premiums by 2022 for those with association health plans - averaging $2,900 a year less than in the ACA marketplace for small businesses and $9,700 less compared with the individual market.

The rule includes several safeguards.

But the move is expected to weaken some of the Affordable Care Act's consumer protections for those buying these plans and make coverage more expensive for those who remain on the Obamacare exchanges. "By allowing the sale of junk plans, the rule will remove younger, healthier individuals from insurance pools, which will drive up the cost of coverage for all other Americans", said Reps. That law, which goes into effect July 1, authorizes associations or related businesses to form multiple employer welfare arrangements (MEWAs), which would be regulated by the insurance division.

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"That flexibility also frees AHPs from some regulatory overhead, and may enable some AHPs to achieve the scale necessary for administrative efficiency and market power".

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