President Donald Trump issued an executive order last year to expand access to association health plans (AHP). The Employee Benefits Security Administration, part of the U.S. Labor Department, recently issued proposed rule changes that would help expand AHPs under the Affordable Care Act. It’s an effort to help provide more options for small employers looking for other insurance plans besides the small group health insurance market, which has been plagued with higher prices and fewer coverage options.
“Association health plans are typically offered as packaged insurance programs to employers within a certain geographic region, such as from local chambers of commerce, or industry, such as statewide trade associations as a benefit of membership of the association,” says Chris Wolpert, managing member and employee benefits adviser at Group Benefit Solutions, an employee benefits management firm.
Expanding the rules could mean changes for the insurance industry. Here’s what you need to know.
AHP Rule Changes Would Disrupt Markets
One of the biggest changes the proposed AHP rules could bring is allowing businesses in different states to be in the same group, effectively purchasing health insurance across state lines. Long one of the Trump administration’s goals in its efforts to change the Affordable Care Act (also known as the ACA or Obamacare), this proposal would let businesses in the same industry but different states join the same association for the purpose of purchasing insurance.
Other changes include access. The American Academy of Actuaries issued a brief in February 2017 saying that expanding AHPs could make it harder for people with higher health care costs to obtain coverage. Groups are pooled and all rated together in AHPs, Wolpert says, so a young, healthy group would subsidize groups with high claims. In addition, healthy people could leave the individual and small-group markets, destabilizing them.
State Regulation Looks Likely, but Details Are Unclear
The proposal is meant to decrease regulations on AHPs themselves, and Wolpert says having a packaged program makes it easy to evaluate and understand different packages. But some states have different laws and regulations when it comes to AHPs, so even finalization of the proposed rule change could result in different implementations in different states. At this point it’s unclear who would be the regulatory authority over expanded AHPs, or what consumer protections would be put in place if the proposal goes into effect.
Waiting for Comments
The proposed change is now subject to a 60-day comment period. In addition, state regulation could mean changes if the rule is implemented, such as making it more difficult to join associations. In the meantime, current law still stands. Insurance companies should stay abreast of developments, while individual brokers should familiarize themselves with already existing AHPs and determine whether more would be likely to arise in their practice areas. “Brokers who want to work with AHPs will need to contact the AHP itself about becoming appointed, which would allow them to solicit and sell those AHPs,” Wolpert says.