Association Health Plan final rule could cost consumers millions of dollars

ERISA Access for the Self-Employed (EASE) believes the final rule on Association Health Plans (AHPs) fails to do what President Donald Trump promised last year. 

EASE released its assessment of the final rule, stating that it "fails to fulfill the stated intent" of the Oct. 12 executive order.

The final rule will decrease costs for 3.2 million people, but it also will increase healthcare coverage costs for six million people in the process, according to the Department of Labor (DOL)'s estimates.

EASE assessed that the final rule will not help with purchasing health insurance across state lines and might end up making it impossible to create national healthcare plans.

John Arensmeyer, founder and CEO of Small Business Majority  

"If the goal is to mitigate the effects of ACA over-regulation, the rule is a step in the wrong direction," the assessment states.

John Arensmeyer, founder and CEO of Small Business Majority, said that if the current U.S. Department of Labor proposal for association health plans becomes a rule, it would be easier for a few select small businesses with younger and healthier employees to purchase health plans that might be cheaper in other states.

"The tradeoff, however, is the small-group insurance market would split in two—one pool for businesses that want bare-bones plans and one for firms that need more comprehensive coverage," Arensmeyer told Keystone Business News. "This would eventually lead to major spikes in premiums, particularly for those small businesses with older or sicker workers."

Arensmeyer said the multi-state plans would offer fewer consumer safeguards.

"In fact, employees covered by these association plans would not actually be protected in the state where they live since the regulations created for a specific plan could supersede state laws that protect consumers from rate increases and poor coverage," Arensmeyer said.

Arensmeyer said the Trump administration’s proposal is unnecessary because small businesses are already allowed to band together to purchase health insurance.

"That system is called the small-group insurance market, and the more people we have in the small-group market pool, the lower premiums will be for participants," Arensmeyer said. "Encouraging people to leave the small-group market, however, will only harm small firms by raising premiums for everyone else."

Chris Condeluci noted in the June 11 CCLaw & Policy Newsletter that the leaders of state-based exchanges don't have much to worry about because the regulations don't impact how each state regulates its insurance carriers.

Elizabeth Rementer, the deputy director of communications with the Pennsylvania Insurance Department, said the office would not comment on a final rule they have not seen yet, but she provided Commissioner Jessica Altman's statement on the proposed rule from earlier this year.

"It is a laudable goal to seek to increase access to affordable health coverage; however, we have concerns about increased potential for consumer harm both immediately, and in the near future, as the ripple effect of the proposed changes begin to affect market stability, insurers and the provider community,” Altman said in the statement. “The proposed rule, if finalized as drafted, would result in greater barriers to high-quality coverage and decreased affordability for many consumers."

Altman said AHPs would not have to provide Affordable Care Act-mandated minimum essential health benefits and prescription drug coverage requirements, which means that individuals and families who make the switch to an AHP may not have access to basic services or critical care that they need.

In her statement, Altman said that although AHPs would have to comply with health-specific nondiscrimination provisions, the rule says nothing about protecting consumers based on gender, age or industry.

"I’m also concerned that this new rule will destabilize the market," Altman said. "If Association Health Plans are exempt from state regulation and oversight, they could cherry-pick healthier risks. The rule could lead to younger, healthier consumers leaving the individual and small group markets, which would inevitably increase premiums for those still in those markets."

Altman said that additional protections should be included to ensure a level playing field for all and to minimize destabilizing the impact on the insurance market.

“It is not sound public policy to create regulatory ambiguity that would invite associations to avoid effective regulatory oversight,” Altman said. “Any attempt to call into question state laws that govern the formation and availability of Association Health Plans would put Pennsylvania consumers at risk.”

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Pennsylvania Insurance Department Small Business Majority U.S. Department of Labor

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