New Rule Allows Creation of Association Health Plans That Skirt ACA Regulations, Protections

A new rule from the Trump administration finalizes ability for small businesses and self-employed individuals to band together to purchase health insurance that is less expensive and does not have to fully comply with the Affordable Care Act (ACA).

A new rule that will allow small businesses and self-employed individuals to band together to purchase health insurance, fulfills a campaign promise by President Donald Trump to make it easier to sell insurance across state lines.

Under the new rule, association health plans (AHPs) can serve employers in a state or employers in the same industry across state lines. According to the Department of Labor, the new rule provides more choice and will make health insurance more affordable.

“Obamacare has been especially brutal for small businesses,” Trump said at the National Federation of Independent Businesses 75th Anniversary luncheon. He added, “As a result of Obamacare many small businesses, small business employees, sole proprietors have no good or affordable options. But now they do.”

The purpose of the new rule is to make it easier for small businesses to band together to negotiation prices, while also allowing them to “escape some of Obamacare’s most burdensome mandates,” Trump said.

The rule follows an executive order that Trump issues in October 2017 calling for Secretary of Labor Alexander Acosta to consider allowing more employers to form AHPs in order to expand access to health coverage.

In a May 2018 report, the Congressional Budget Office (CBO) estimated that by 2023, 4 million people will be enrolled in AHPs, which do not need to comply with many current insurance regulations. According to the press release from the Department of Labor, of those 4 million people, approximately 400,000 will be Americans who are currently uninsured. However, the gains from AHPs will not stem the tide of Americans losing health coverage. The same CBO report found that between 2018 and 2023, even taking into account the 4 million who will be insured under AHPs, there will be 6 million more uninsured overall, “mainly because of the elimination of the penalty associated with the individual mandate and the higher premiums resulting from that change.” According to the CBO, 90% of the 4 million who will be insured through AHPs in 2023 and later years would have been insured in the absence of the new AHP rule.

“Many of our laws, particularly Obamacare, make healthcare coverage more expensive for small businesses than large companies," Acosta said in a statement. "AHPs are about more choice, more access, and more coverage. The president's decision helps working Americans—and their families—purchase quality, affordable health coverage."

In an op-ed for The Wall Street Journal, he highlighted the safeguards in place, such as healthcare antidiscrimination protections and other consumer protections, as well as the requirement to file annual reports with the Labor Department regarding financial, compliance, and consumer protection data,

Families USA quickly responded to the final rule and argued that it would likely allow the sale of substandard plans and lead to financial devastation for families. Families USA’s executive director, Frederick Isasi, said that the rule undercuts financial protections and will be difficult for regulators to oversee.

“This new change in federal regulation unleashes on families the games that insurance companies used to play,” he said in a statement. “It will allow insurers to discriminate against people who have been sick or are sick—driving up their costs and exposing them to terrible financial expenses. Do we really want to return the nation to a time when over half of all bankruptcies of hard-working families was from medical debt?”

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