Trump Administration Releases Rules on Association Health Plans

The Trump administration is continuing its assault on the Affordable Care Act, this time by making it easier for employers to join forces to create health plans that don’t have to provide many of the comprehensive benefits required under the ACA.

Under a new rule released by the U.S. Department of Labor Tuesday, many of these “association health plans” will not have to offer what the ACA called “essential health benefits,” including coverage for hospitalization, maternal care, prescription drugs, mental health and addiction treatment, and pediatric services.

Without those benefits, the administration says, the plans will be able to offer premiums far cheaper than plans now sold on the individual and small-group markets. Health plans in the large-group market, those covering more than 50 employees, are not required to cover the benefits. The new rule eliminates some restrictions that made it hard for the plans to become large enough to be classified in the large-group market.

The rule will also allow the plans to be sold across state lines, which some state regulators say would undermine their ability to provide oversight. That is a concern to many regulators because of the fraud and insolvencies the plans were notorious for before the ACA.

Critics warn that the plans will be able to attract a younger, healthier demographic, leaving older and sicker people to pay higher premiums in the individual and small-business insurance markets.

Some state insurance regulators who objected to the proposed rule warned that it could cripple the health insurance markets in their states. Numerous consumer and professional medical organizations, as well as disease advocacy groups, also were opposed.

Even insurers opposed the rule. “We remain concerned that broadly expanding the use of [association health plans] may lead to higher premiums for consumers who depend on the individual or small group market for their coverage,” America’s Health Insurance Plans, the lobbying arm of the insurance industry, said in reaction to the new rule’s release. “Ultimately, the rule could result in fewer insured Americans and may put consumers at greater risk of fraudulent actors entering this market.”

Labor Secretary Alexander Acosta did not deny that the new rule would drain people away from the individual market. He said as many as 4 million people will gain coverage under the new plan offerings in the next few years.

That’s not far off from estimates from Avalere, a health research and consulting company, which predicted that the new rule would draw 3.2 million enrollees out of the individual and small-group markets by 2022. Avalere also projected that premiums in the individual market would increase by 3.5 percent.

But Acosta touted the rule as offering many consumers a cheaper alternative. “This expansion will offer millions of Americans more affordable coverage options.”

The rule represents one of several actions the administration and congressional Republicans have taken to undermine the ACA. GOP tax legislation last year removed the requirement that all Americans obtain health insurance, a key component of the ACA.

Earlier this month, the Justice Department asked a federal court to throw out requirements that insurance carriers accept patients with pre-existing conditions.