Trump Administration Aims to Expand Association and Short-Term Health Plans
Last week, the Trump Administration proposed new rules that would allow small businesses and trade groups to band together to purchase health insurance. This move would open the door to limited coverage health plans, including plans that lack mental health and substance use disorder benefits. The proposed rules come from an executive order President Trump signed earlier this year that directed federal agencies to loosen restrictions on short-term health insurance and association plans to create less comprehensive coverage options.
How Association Health Plans Would Work
The Department of Labor’s (DOL) proposed rule would expand Association Health Plans (AHPs), also known as Small Business Health Plans, to small employers and sole proprietors and their families. The proposed rule, which applies only to employer-sponsored health insurance, would allow employers to join together as a single group to purchase insurance in the large group market. These groups could be organized on the lines of a geographic area or an industry. The Labor Department said that up to 11 million people who are self-employed or work for small businesses would be eligible for these plans.
The Administration’s goal is to expand access to affordable health coverage, especially among small employers and self-employed individuals, by removing restrictions on the establishment and maintenance of AHPs. By allowing more small groups to band together as recognized entities, proponents suggest that they will be able to negotiate lower rates and more effectively spread risk.
Under the proposed regulation, the Administration would focus regulatory oversight on the association rather than the individual members of the association when evaluating association coverage, as the association would be treated as the “employer” rather than the individual entities contained therein.
Coverage and Cost Concerns
Association Health Plans would be exempt from certain Affordable Care Act (ACA) patient protections and benefit rules, including the essential health benefits (EHB) requirement. The EHB requirement ensures that commercial plans provide enrollees with mental health and addiction service benefits. Without the EHB requirement, small businesses employees on AHPs could lose behavioral health care coverage.
Industry experts have also raised concerns that AHPs could weaken the ACA health insurance exchanges. These cheaper plans might be more desirable for young and healthy participants, which could lead them away from purchasing insurance on the Exchanges and toward AHP coverage. This move would ultimately lead to higher premiums for consumers with chronic health conditions that rely on the Exchanges for comprehensive coverage.
Notably, these plans do retain protection for individuals with pre-existing conditions. In other words, health insurers would not be able to charge individuals with known health conditions higher premiums or reject them from coverage.
The proposed rule can be found here. There is a 60-day comment period for the proposed rules which will end on March 6, 2018.