The Trump administration is proposing to let small firms act more like big corporations to buy cheaper health insurance, a measure that would get around some of Obamacare’s requirements.
The rule would broaden the availability of less-regulated health insurance coverage to more small employers, and to self-employed people. The rule does so by letting many more small firms band together under “association health plans,” or AHPs. Those plans would be exempt from many of the Affordable Care Act’s rules on what benefits have to be covered.
The regulation will “expand employer and employee access to more affordable, high-quality coverage,” the Labor Department said in the proposed rule, which has to go through the federal rule-making process and could still be changed.
It’s the latest step by President Donald Trump’s administration to do away with parts of the Affordable Care Act without a full repeal of the law, which Republicans in Congress have been unable to do. In October, Trump signed an executive order as part of a White House push to undermine the Affordable Care Act and open up new options to consumers.
Less Expensive, Fewer Benefits
Critics said they worry that the health plans created under the rule would have slimmer packages of benefits at lower prices than ACA plans, drawing away healthier customers from Obamacare’s markets and leaving the sick and expensive.
The association plans, like the health coverage currently offered by big employers, wouldn’t be subject to Obamacare’s requirement that plans cover 10 types of essential benefits, such as hospitalizations, drugs and maternity care.
“This rule seems to err on the side of making AHPs broadly available without making any effort to embed the protections that people get from ACA-covered plans,” said Sharon Block, a former senior Obama administration Labor Department official who now runs the Labor and Worklife Program at Harvard Law School. “You’re moving people towards less-quality plans and potentially doing harm to the people who stay in the ACA-covered plans.”
Other Obamacare rules do apply though, including caps on how much an individual has to pay out of pocket in a year, and bans on lifetime or annual limits for services that are covered by the plan. All plans are also required to cover a list of preventive services with no out-of-pocket costs to the beneficiary.
Nor will they be able to charge different rates to people based on how healthy or sick they are, something opponents of the change had feared.
“That’s a big deal, and would mitigate the extent to which these plans destabilize the current insurance market,” Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation, a health research group, said on Twitter. “But I have no doubt they would find clever ways of cherry picking healthier people implicitly — e.g., based on what benefits they cover.”
Banding Together
The proposal sets out two main cases under which small firms could band together to buy insurance, effectively acting like a bigger company. Firms in the same geographic area could do so, as could companies engaged in the same type of business. The administration estimated that as many as 11 million people who work for small businesses would take advantage of the plans.
Senator Rand Paul, a Kentucky Republican, has long advocated for association health plans, and praised the proposal.
“Conservative health-care reform is alive and well, and I will keep working with President Trump to build on this progress,” he said in a statement.