UPDATE: June 20, 2018: This story has been updated to add information on a New York and Massachusetts lawsuit.
- The Department of Labor Tuesday finalized its plan to expand the role Association Health Plans play in the healthcare landscape, clearing the way for cheaper plans to be offered by small employers in a regional area or for a particular industry nationwide.
- DOL senior officials told reporters that the final rule contains anti-discrimination protections that align with rules for large employers and preserves individual state authority to regulate AHPs, steps that America’s Health Insurance Plans praised. But AHIP, other industry groups and lawmakers raised concerns that the rule may lead to increased premiums for those who depend on the individual or small group market, resulting in fewer insured and an increase in fraudulent actors.
- New York Attorney General Barbara Underwood and Massachusetts Attorney General Maura Healey announced Wednesday that they believe the final rule is unlawful and will lead to fewer consumer protections. "We will sue to safeguard the protections under the Affordable Care Act and ensure that all families and small businesses have access to quality, affordable health care," the two said in a statement.
Administration officials said the rule would help small business employees gain more affordable health coverage, while Democrats and some other skeptics worried it could lead to a proliferation of junk plans and disrupt the risk pool.
“The rule released today levels the playing field between small and large employers by providing new opportunities for small employers to band together to gain the same health insurance options as large employers,” CMS Administrator Seema Verma said in a statement.
Senate Finance Committee Ranking Member Ron Wyden, D-Ore., blasted it as bad policy.
“The Trump Administration is opening the floodgates for junk plans that will make it harder for people with pre-existing conditions to find affordable coverage and easier for scam artists to make a quick buck at the expense of American families,” Wyden said. “Association health plans will send premiums for real, comprehensive health insurance even higher and leave an unstable insurance market in its wake.”
DOL Secretary Alexander Acosta pointed on a call with reporters to a Congressional Budget Office report that estimated that 4 million additional Americans will enroll in AHPs “within a few years,” including 400,000 that are currently uninsured.
Senior officials also argued that people “are going to be protected against pre-existing conditions just as they are in the large group market, as well as age and gender” under the final rule. "The same rules that apply in the large group market are going to be applied for AHPs under the rule," an official told reporters.
An analyst note from Jefferies agreed the final rule contains those protections but noted that AHPs can reduce benefits below the Affordable Care Act’s 10 essential categories. “The lower benefits would facilitate lower premium prices for price sensitive buyers, but might not deliver better ‘value,’” the note said.
But Karen Pollitz, senior fellow for health reform and private insurance at the Kaiser Family Foundation, told Healthcare Dive that the final rule as written contains inadequate protections, pointing to the wellness program provision as one backdoor to potential health status discrimination. A Democratic staffer echoed the concerns, telling Healthcare Dive it is not clear that the rule prevents discrimination based on age and gender.
AHIP praised the protections in the final rule but warned that those who depend on the individual or small group market may be left with higher costs.
The American Hospital Association raised concern that the expansion would reduce costs for healthy individuals at the expense of those who continue to rely on the health insurance marketplaces.
“We are particularly disappointed that the U.S. Department of Labor preempts states from fully regulating these plans, preventing states from ensuring appropriate consumer protections are in place,” AHA EVP Tom Nickels said in a statement.
California insurance Commissioner Dave Jones agreed that the final rule allows for continued state regulation of Multiple Employer Welfare Arrangements, but said the rule threatens the existence of more comprehensive health insurance plans.
The National Association of Manufacturers also lauded the final rule, saying that the expansion of AHPs could offer the potential for improved care and lower costs.
“AHPs offer an important market-based pathway to expanded health care coverage and lower health care costs, and now is the time to make this option more widely available to smaller companies and their employees,” said Robyn Boerstling, NAM VP of infrastructure, innovation and human resources policy, in a statement.
Still, some critics have warned that the proposed rule would have unintended consequences. A diverse set of stakeholders including advocacy groups, hospitals and insurers commented that the proposal would increase the risk of fraud and insolvency for consumers, increase fragmentation of risk pools and fail to protect against discriminatory practices.
Alliance of Community Health Plans President and CEO Ceci Connolly told Healthcare Dive she remains concerned with the final rule’s impact on the stability of the individual market, on top of other pressures put on the insurance market: namely, the Republican repeal of the individual mandate penalty and the ending of cost-sharing subsidies. She also raised concern that AHPs don’t have to cover the full range of essential health benefits required by the ACA.
“There’s been a history of fraudulent behavior in these plans,” Connolly said. “What happens to the risk pool when you come up with multiple ways to siphon off the healthiest members of a risk pool?”
The finalization comes nearly a year after President Donald Trump issued an executive order directing the government to consider expanding AHPs, short-term, limited-duration insurance and health reimbursement arrangements.