President Donald Trump continued chipping away at the Affordable Care Act (ACA), signing another executive order weakening the health care law after Congress failed to repeal it.
This time, the executive order took aim at the small group market, easing the rules that allow small businesses to band together to buy health insurance through association health plans.
Association health plans could cover small businesses, trade groups, unions and self-employed individuals. Associations wouldn't have to meet ACA benefit requirements or cover a minimum percentage of employee health care costs.
Critics warned that the order could undermine the stability of the health insurance markets by opening up skimpier, cheaper plans that would divert healthy people away from ACA plans.
The order will direct the Department of Labor to "modernize" rules to allow small employers to create association health plans, The Hill reported. Small businesses will be able to band together if they are within the same state, in the same "line of business," or are in the same trade association.
But these proposed rule changes could take months or even longer to take effect, according to administration officials who outlined the order for reporters Thursday morning. The proposals may not be finalized in time to affect coverage for 2019, let alone next year.The reason?The proposals have to go through the federal government's rule-making process, which involves public notice and comment - and takes time.
Other elements of the White House proposal include:—Easing current restrictions on short-term policies that last less than a year, an option for people making a life transition, from recent college graduates to early retirees. Those policies are not subject to current federal and state rules that require standard benefits and other consumer protections.—Allowing employers to set aside pre-tax dollars so workers can use the money to buy an individual health policy.
The executive order is not the final word on the association health plan issue, according to Marcy Buckner, vice president of government affairs for the National Association of Health Underwriters (NAHU). After NAHU leaders spoke with Department of Health and Human Services (HHS) officials on the issue earlier this week, Buckner said she expects to see HHS and other federal agencies "to put the fine print on how this all will work."
NAHU does not have an official position for or against association health plans, Buckner said.
"What we’re more concerned about is not the creation of the association health plans but making sure the input of the state insurance commissioners is taken into account if this executive order goes forward," she said.
Association health plans have pros and cons as far as stabilizing the health insurance marketplace is concerned, Buckner said.
"They do allow some small employers who may have believed they could not offer health insurance to join together with other small groups to create these association health plans. So in that way, allowing more access to covered lives helps to stabilize the market, to include more people into the fold," she said. "The downside is if they are allowing one individual to fold into the association health plan, that is one negative that we discussed a lot because it opens the group plans to individuals and these are two very different types of markets. We have always talked about keeping the individual market for individuals and the group market for groups. You’re mixing two different types of risks."
B. Ronnell Nolan, president and CEO of Health Agents for America (HAFA), expressed some skepticism over the Trump executive order.
"HAFA would support any initiative that would reduce the premiums for our clients, increase the doctors and hospitals included in the networks and finally create some level of competition," she said. "However, association plans have typically not worked in the past and would need 'experts' to create an association product that may have a chance. We continue to wait for those in Washington to address the true cost of health insurance, and that is health care and the cost of drugs."
The National Association of Insurance and Financial Advisors (NAIFA) has had a number of concerns over association health plans in the past, said Mark Briscoe, senior director for strategic communications.
The expansion of association health plans may fragment the health insurance market since the plans' exemption from state-mandated benefit laws may allow them to “cherry pick” only the healthiest employees for the group health insurance plan, according to a NAIFA statement.
"Lack of stringent solvency standards and state regulatory oversight may leave beneficiaries with an empty promise of coverage after incurring medical services because the lack of regulatory oversight will allow fraudulent operators to flourish and even legitimate plans to become insolvent," the statement continued.
Association health plans got a black eye in the late 1980s and early 1990s. These plans were part of Multiple Employer Welfare Arrangement (MEWA) plans that were in effect during that time. A series of bankruptcies over that time period left hundreds of thousands of people with unpaid medical bills.
Instead of looking to association health plans, "consumers and employers should be encouraged to purchase fully-insured plans that meet the solvency standards in state law and regulation," the NAIFA statement said.