June 21, 2018
The Trump administration’s Department of Labor on June 19 issued a final rule that lets groups of small businesses offer Association Health Plans (AHPs), which are health insurance plans that sidestep some provisions of the 2010 Affordable Care Act, or Obamacare.
America’s Health Insurance Plans (AHIP), a national trade association, responded.
“Every American should be able to get comprehensive health care coverage they can afford, and we support the goal of increasing competition and choice in ways that improve affordability,” said Kristine Grow, senior vice president of communications for AHIP, in a statement.
She approved the new rule’s “important protections” that are “ensuring consumers, including those with pre-existing conditions, do not face discrimination as new association plans are created, and by preserving state authority to regulate AHPs offered in their markets.”
Such growth may not eliminate future bumps in the road, though.
“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,” Grow said. “Ultimately, the rule could result in fewer insured Americans and may put consumers at greater risk of fraudulent actors entering this market.”
Anthony Wright, head of Health Access California, a consumer group in the Golden State, criticized expanding AHPs. “President Trump promised to deliver ‘tremendous’ health care for Americans, but all he’s delivered are tremendously bad coverage options for health care consumers,” Wright said in a statement.
The AHPs also concern Christine Owens, executive director of the National Employment Law Project, a nonpartisan, nonprofit group that researches and advocates on issues impacting low-wage and jobless workers.
“AHPs will cherry-pick what risks to cover and what benefits to offer, siphoning younger and healthier individuals away from state-regulated markets, and leaving millions of sicker individuals at risk of losing their health insurance,” Owens said in a statement. Further, the Labor Department rule “exempts AHPs from the ACA consumer protections that apply to small businesses and individuals.”
A gap in what the AHPs promise and deliver likewise gives pause to Frank Knapp Jr., president and CEO of the South Carolina Small Business Chamber of Commerce. “AHPs do not level the playing field for small businesses and big businesses,” he told MultiBriefs.com.
“Big businesses with health insurance for employees cover most of the essential benefits like maternity coverage and prescription drugs. Small businesses should not have to drop that important coverage to get cheaper rates. AHPs essentially would create a two-class system, big businesses with good plans and small businesses with inferior plans. This does not level the playing field for small businesses when trying to recruit and retain good employees.”
Tom Miller, a resident scholar with the American Enterprise Institute in Washington, D.C., told MultiBriefs.com that the AHPs deliver “new potential life rafts for small businesses and self-employed disadvantaged by ACA blend of mandates, regulation, and income-related subsidies.”
To this end, the AHPs will “unwind misguided Obama administration rule treating size of each business participating in an AHP as only its own number of employees (for regulatory purposes) rather than aggregating the total of all employees in the AHP (to get over the 50-employee threshold and qualify for large employer status).”
In Miller’s view, there is another benefit of the AHPs. They “stop forcing certain small employers, their workers, and other self-employed from subsidizing other ACA beneficiaries — through regulatory cross subsidies and being forced to buy what they do not want.”
What does he suggest? “A better, more honest approach would be to subsidize lower income or higher risk individuals directly through the tax code,” Miller said.
Prior to the June 19 rule change by the Labor Department, the Department of Justice had deemed the individual mandate of the ACA unconstitutional. The most recent chapter of U.S. healthcare reform remains unwritten.