Associated Health Plans

Remember the days before the Affordable Care Act?

Remember paying more than your neighbor for the same insurance coverage solely because you have diabetes?

Remember worrying that you might reach your insurance’s lifetime limit on coverage?

Well, those worries are very real possibilities again thanks to AHPs.

The latest attack on the Affordable Care Act (ACA) comes in the form of proposed rules that would make it easier for small businesses to band together and create associated health plans, or AHPs, that would be exempt from consumer protections mandated by the ACA. The first rule, proposed Thursday, January 4th, keeps the ACA prohibition on lifetime limits and protections for people with pre-existing conditions. However, the rule would allow associations to throw out the ten essential health benefits promised by the ACA, which include mental health, substance abuse treatment, maternity care, and prescription drug coverage.

Even worse, the Trump administration is expected to propose a second rule soon that lifts the Obama administration’s restrictions on short-term health insurance plans that are not subject to any of the ACA’s provisions. This means that the short-term plans could not only eliminate coverage for essential health benefits, but also discriminate based on pre-existing conditions and institute lifetime caps on coverage.

So, what are associated health plans?

The term “associated health plans” refers to the concept of different associations offering health insurance. The concept is easiest to explain with an example: several independent hair salons might form an association to buy one health plan for all their employees. Because there would be more more employees with all the salons grouping their employees together than if any one salon bought insurance for its employees by itself, the salons have access to better plans that are marketed to large groups. Most AHPs are organized around a common professional interest, like a professional organization or industry group, a trade organization, or a state or local chamber of commerce.

In theory, AHPs help small businesses get better insurance for their employees because they can pool their resources and purchase better plans with fewer fees and greater benefits that are meant for larger groups. If it is marketed to individuals, an AHP is subject to the requirements of the ACA for nongroup coverage. This means that the AHP must comply with applicable standards and insurance protections, including coverage for essential health benefits. If the AHP isn’t marketed to individuals, however, it can exist within a single state, and be subject to that state’s insurance laws, which may not include coverage for essential health benefits.

Why are AHPs bad for people with diabetes?

Even though the first rule keeps the ACA protections for people with pre-existing conditions and ban on lifetime limits, encouraging AHPs allows associations to get out of providing essential health benefits. People with diabetes could see an increase in costs for their prescriptions, regular doctor visits, and overall premiums. Additionally, AHPs could charge customers different prices depending on their age, gender, and location. 

The second rule, when it gets announced, will allow short term insurance plans to eliminate not only the essential health benefits, but also the ACA restrictions on charging people with pre-existing conditions more and the ban on lifetime limits. People with diabetes could face significantly higher prices for plans that offer less, and could be locked out of coverage all together when they get too expensive.

If even insurance companies admit that something is bad for consumers, it probably is. Proponents of the rules hope that major insurance carriers will be interested in selling group plans to smaller employer buyers. However, insurance companies have spoken out against rules like these for a while. America’s Health Insurance Plans, which represents large insurance carriers including Anthem, Centene, Oscar Health, Humana, and many Blue Cross and Blue Shield plans said:

Americans deserve affordable choices, and we are concerned that the changes proposed would lead to higher prices and weaker consumer protections in the small group and individual markets, where nearly 40 million Americans get their coverage.”

What could happen if these rules are implemented?

Together, these rules have advocates worried about massive instability in ACA insurance marketplaces. Experts and advocates warn the rules would lead to skyrocketing premiums and a major fragmentation of the insurance markets. The short term plans especially likely would attract younger, healthy people because they’d cost less and cover less. Without healthy people in the individual marketplaces, there will be imbalance that will cause premiums for existing consumers to increase dramatically.

In addition, these two rules could open the door to a new wave of poorly regulated health plans that exclude coverage of key services required by the ACA. With regulations stripped back, AHPs could abandon the essential health benefits, and the short term plans outlined in the second rule could abandon every requirement of the ACA, including the popular provision protecting people with pre-existing conditions.

It comes down to this: people with diabetes could be stuck paying much more money for much less coverage.

What can you do?

Want to share your thoughts on Associated Health Plans with the government? There is a sixty day comment period on the first proposed rule expanding AHPs. Your comment will be shared with the Department of Labor. You can visit the Federal Register to leave a comment.