Land O'Lakes is launching new self-insured multi-state group health plans under the new association health plan (AHP) regulations by the Trump administration, calling itself the first to do so under the relaxed rules.
The company will offer the AHPs for farmers of participating co-ops and individual dairy farmers that are in the Land O'Lakes' network in Minnesota and Nebraska.
The Land O'Lakes Cooperative Farmer Health Plan will offer several Affordable Care Act-compliant options that cover the 10 essential health benefits. The company said the plans provide "broad network coverage" and are more affordable than plans in the individual market.
The Trump administration has promoted AHPs as a low-cost option for small businesses, farmers and sole proprietors. Critics point out that the new regulations allow plans to offer skimpier coverage, for example taking into account pre-existing conditions, and may lead to higher premiums in the individual market and small-group markets.
Before the ACA, millions of people and small employers received coverage through AHPs. However, the landmark law required those plans offer the same consumer protections as individual and small-group plans, including protecting people with pre-existing conditions.
Faced with the new regulations, many AHPs folded. In fact, the Kaiser Family Foundation said only 6% of employers with fewer than 250 employees offered health insurance through AHPs last year.
Land O'Lakes piloted a similar AHP for Minnesota farmers in a partnership with Gravie, a benefits marketplace. The plan was offered to 12 Minnesota-based Land O'Lakes co-ops and their dairy farmers. The company also launched an earlier health plan in 2011 to co-op members. That plan covers nearly 12,000 people in 13 states.
Land O'Lakes said the plans will be expanded to nearly 15,000 more eligible farmers in Minnesota and 28,000 farmers in Nebraska.
Pamela Grove, senior director of benefits at Land O'Lakes, said in a statement the company has worked with the Nebraska Insurance Department on the plans and it hopes to collaborate with other state regulators to further expand them.
One concern voiced by critics of AHPs are that they don't offer the same level of coverage as ACA plans. Attorneys general from 11 states and Washington, D.C., sued the Trump administration earlier this year, charging that expanding AHPs "increases the risk of fraud and harm to consumers, requires states to redirect significant enforcement resources to curb those risks and jeopardizes state efforts to protect their residents through stronger regulation." They argued the "rule is unlawful and should be vacated."
However, Land O'Lakes said its plans will provide pre-existing condition protections and deliver the 10 essential health benefits, including hospitalization, outpatient and mental health coverage.
Critics expect upheaval from AHPs, but the actual impact these plans have depends on each state and their respective rules, a recent Commonwealth Fund report found. States with strong regulations against skimpy plans and a stance against the option will likely not see many new AHPs.
A report from the Society of Actuaries predicted that between 3% and 10% of those in ACA marketplace plans will leave for AHPs. What further complicates that shift is most of the people who are expected to flee the exchanges will be young and healthy. That movement could result in an unhealthy risk pool in the ACA marketplace and higher premiums.
Avalere, which predicted AHPs will shift 3.2 million enrollees from the individual and small-group markets to AHPs by 2022, said the move will mean 3.5% higher premiums for individual insurance and about 0.5% higher premiums for small-group ACA plans.