Trump administration finalizes expansion of association health plans

Trump
Trump has frequently cited association health plans as a way to provide businesses with "tremendous insurance at a very low cost." (Flickr/Gage Skidmore License: https://bit.ly/1jxQJMa)

Despite protests from industry groups, the Trump administration finalized a rule to expand association health plans (AHPs) on Tuesday.

The rule, proposed by the Department of Labor (DOL) in January, allows employers to join or form AHPs and purchase insurance on the large group market. Although AHPs are not a new concept, the rule loosens restrictions around which organizations can join or create a plan, allowing a larger swath of employers to form an AHP based on either industry or geography.

Additionally, sole proprietors and self-employed workers are allowed to join AHPs under the DOL's final rule (PDF) released on Tuesday. The rule grandfathers in previously existing AHPs which are permitted to operate under previous guidance. New plans can also choose to follow the new rules or the old guidelines, according to the DOL. 

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“This new scale and access means AHPs can offer more options at a better price,” DOL Secretary Alexander Acosta wrote in an op-ed for the Wall Street Journal prior to the rule's release. “Some four million additional Americans will enroll in, and benefit from, AHPs within a few years, according to the Congressional Budget Office. Among the enrollees will be about 400,000 Americans who are currently uninsured.”

In a statement on Tuesday, Acosta criticized the ACA for making health coverage more expensive for small business and said "AHPs are about more choice, more access, and more coverage."

Department of Health and Human Services Secretary Alex Azar echoed Acosta in a statement, saying that the changes will allow more Americans to access affordable coverage.  "Allowing small businesses and individuals to band together to offer new options is especially important because access to health insurance for employees of small businesses has narrowed over the years, including under the Affordable Care Act," Azar said.

Centers for Medicare & Medicaid Services Administrator Seema Verma said the goal is to boost small employers who were "left out of Obamacare."

Trump himself has said AHPs will provide businesses with “tremendous insurance at a very low cost.” Conservative groups lauded the new rule as a way to expand affordable coverage and lower healthcare costs.

The rule also drew praise from Rep. Greg Walden, R-Ore., chair of the House Energy and Commerce Committee, and Rep. Michael Burgess, R-Texas, chair of the Health Subcommittee, who said in a joint statement that they would continue to work alongside the White House to lower healthcare costs.

"Association Health Plans will create a new pathway for small businesses and self-employed individuals to come together and produce these plans, with the goal of providing relief to soaring premiums and deductibles," the representatives.

While the Trump administration argued that expanding AHPs would level the playing field for small businesses, industry groups have warned that it will destabilize the insurance market. An analysis by Avalere found that expanding AHPs would siphon off 3.2 million people from the Affordable Care Act exchanges and raise premiums by 3.5%

RELATED: AHIP, AHA express concern over lack of consumer protections in association health plan expansion

Both the American Hospital Association (AHA) and America’s Health Insurance Plans (AHIP) raised concerns that the plans lacked consumer protections. In comments to the DOL, AHA Executive Vice President of Government Relations and Public Policy Tom Nickels said the rule “fails to protect against discriminatory insurance practices.”

Even small business groups were disappointed with the final rule. In a statement, Small Business Majority founder and CEO John Arensmeyer said expanding AHPs would harm the small group market and criticized the administration for doing “all it can to undermine the [ACA] regardless of the consequences.”

“While the new rule may make it easier for a select number of small businesses with younger and/or healthier employees to purchase association health plans that might be cheaper in other states, the tradeoff is that this will cause the insurance market for small businesses to split in two, leading to major spikes in premiums for small firms that remain in the small group market,” he said.