By Jay Hancock and Julie Appleby JUNE 19,
2018
Small
employers will more easily be able to band together to buy health insurance
under rules issued Tuesday by
the Trump administration, but the change could raise premiums for plans sold
through the Affordable Care Act’s online marketplaces, analysts say.
The
move loosens restrictions on so-called association health plans, allowing more
businesses, including sole proprietors, to join forces to buy health coverage
in bulk for their workers.
By
effectively shifting small-business coverage into the large-group market, it
exempts such plans from ACA requirements for 10 “essential” health benefits,
such as mental health care and prescription drug coverage, prompting warnings
of “junk insurance” from consumer advocates.
Supporters
say the new Labor Department rules, which the government estimated could create
health plans covering as many as 11 million people, will lead to more
affordable choices for some employers.
When it
comes to health insurance, “the regulatory burden on small businesses should
certainly not be more than that on large companies,” Labor Secretary Alexander Acosta
told reporters Tuesday.
Existing
rules limit association plans to groups of employers in the same industry in
the same region.
The new
regulations eliminate the geographical restriction for similar employers,
allowing, for example, family-owned auto-repair shops in multiple states to
offer one big health plan, said Christopher Condeluci, a health benefits lawyer
and former Senate Finance Committee aide.
The
rules, to be implemented in stages into next year, also allow companies in
different industries in the same region to form a group to offer coverage —
even if the only reason is to provide health insurance.
Like
other coverage under the ACA, association insurance plans will still be
required to cover preexisting illnesses.
Analysts
warn that because these changes will likely siphon away employers with
relatively healthy consumers from ACA coverage into less-expensive trade-association
plans, the result could be higher costs in the online marketplaces.
“If you
have a group that is healthier than average, you might get a better rate from
one of these plans, and your broker is going to come and say, ‘Hey, I can get
you a better deal,’” said Dan Mendelson, president of Avalere Health, a
consulting firm.
That
would mean that, on balance, consumers insured through ACA small-group and
individual plans could be older, sicker and more expensive, adding to years of
erosion of the ACA marketplaces engineered by Republicans hostile to the law.
Loosening
rules for association plans would lead to 3.2 million people leaving the ACA
plans by 2022 and raising premiums for those remaining in individual markets by
3.5 percent, Avalere calculated this
year.
America’s
Health Insurance Plans, the largest medical insurance trade group, issued a
statement saying the regulation “may lead to higher premiums” in ACA insurance
and “could result in fewer insured Americans.”
Unlike
ACA plans, association coverage does not have to include benefits across the
broad “essential” categories, including hospitalization and emergency care.
The
National Association of Insurance Commissioners previously warned that such plans
“threaten the stability of the small group market” and “provide inadequate
benefits and insufficient protection to consumers.”
The
American Academy of Actuaries has expressed similar concerns.
Business
groups praised the change, proposed in draft form earlier
this year.
“We’ve
been advocating for association health plans for almost 20 years, and we’re
pleased to see the department moving aggressively forward,” said David
French, senior vice president of government relations for the National
Retail Federation.
Association
plans have been around for decades, although enrollment has been more limited
since the ACA’s passage. While some of the plans have worked well for their
members, others have a checkered history.
In
April, for example, Massachusetts regulators settled with
Kansas-based Unified Life Insurance Company, which agreed to pay $2.8 million
to resolve allegations that it engaged in deceptive practices, such as claiming
it covered services that it did not.
The
coverage “was sold across state lines and was issued through a third-party
association,” according to a release from the Massachusetts attorney general’s
office.
Jay
Hancock: jhancock@kff.org,
@JayHancock1
Julie
Appleby: jappleby@kff.org,
@Julie_Appleby
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