Reps. Sam Johnson (R-TX) and Tim Walberg (R-MI) introduced a bill last week that would loosen Affordable Care Act and state-level regulations on association health plans (AHPs).
A bill with similar policy provisions passed the House in 2003, but it was subjected to significant criticism from a wide range of interest groups and did not advance further, Kaiser Health News reported.
- The House will consider four healthcare bills this week, including the Small Business Health Fairness Act, as part of the third phase of Republican-led healthcare reform efforts.
AHPs have been around for decades. They provide a framework for small businesses to extend coverage to employees through health plans established by trade associations and industry groups. However, critics say that deregulation of these multiple-employer arrangements will lead to a rise in fraud and abuse.
“There has been a 30-year history of health insurance scams involving associations and multiple-employer arrangements,” Mila Kofman, executive director for DC Health Benefit Exchange Authority and a former professor at Georgetown University, wrote in a 2005 report on AHP oversight. She determined that AHPs were prone to fraud and abuse because they had been exempted from state regulation under the Employee Retirement Income Security Act.
Congress amended ERISA and passed additional healthcare legislation over the years to expand oversight of AHPs by the U.S. Department of Labor (DoL). However, fraud and abuse associated with AHPs persisted. From 2000 to 2002, state investigations identified 41 illegal AHPs and DoL investigations discovered another three, according to Kofman. “The existing tools that states use to prevent fraud cannot be replicated at the federal level,” she wrote.
Some wondered whether new regulations would apply to AHPs when the ACA passed in 2010. Critics breathed a collective sigh of relief when HHS issued a final rule in September 2011 that made clear consumer protections applying to small group and individual plans would also apply to AHPs. Timothy Jost called the move “a victory for American healthcare consumers” in a September 2011 Health Affairs Blog post.
Proposals to gut regulations for AHPs have caused some concern. The bill currently under consideration could create opportunities for fraud, put more AHPs at risk for insolvency, remove consumer protections and lead to increased market segmentation, according to a Commonwealth Fund article by Kevin Lucia and Sabrina Corlette, professors at Georgetown University. The National Association of Insurance Commissioners has also expressed its opposition to policies that would undermine state authority and specifically mentioned AHPs in a January letter to Congress.
Despite concerns, the idea of expanding AHPs seems to appeal to Republican lawmakers. “I love associated health plans,” House Speaker Paul Ryan said on the Sean Hannity Show. “I think it’s a huge market mover.” The White House also issued a statement indicating its support for legislation that would lead to an expansion of AHPs.
Republican support for AHPs will not be enough to get legislation passed. While Congress can tweak some healthcare policies through the reconciliation process, the bill currently under consideration would require 60 votes to pass the Senate, where Republicans hold 52 seats. Given the current political climate, it seems unlikely Republicans could reach the 60 vote threshold.