Association Health Plans Would Be Another Hit to Struggling Insurers

Gregory A. Freeman, January 10, 2018

A proposed rule allowing more AHPs could further strain the market for health insurers still participating in the exchanges. The regional plans could siphon off the healthier patients.

The Labor Department's proposal to increase consumer access to association health plans could further undermine the already crumbling health insurance marketplace under the Affordable Care Act.

Consumers may be drawn to lower premiums in AHPs even if they actually aren't getting much for their money, leaving only the sickest and costliest people to be insured on the ACA exchanges, says Gerald F. Kominski, PhD, a professor of health policy and management and director of the University of California, Los Angeles Center for Health Policy Research in the Fielding School of Public Health.

"This will have a big potential impact and it's a negative impact. Insurers participating in the marketplace are not going to be happy about this," Kominski says. "This undermines the marketplace because in this association health plan marketplace you don't have to comply with all the ACA regulations, specifically, the essential health benefits."

Related: Labor Department Wants to Expand Association Health Plans

If the proposal is adopted, self-employed people and small businesses will be able to form groups across state lines and qualify for group health plans.

Up to 11 million employees of small businesses and sole proprietors who lack employer-sponsored insurance could find coverage under this proposed change to the Employee Retirement Income Security Act (ERISA), the Labor Department says.

What the rule would allow

The two primary changes in the rule would allow AHPs to be offered to membership without regard to state lines, and also allow self-employed individuals to take part in a large-group plan. 

Kominski says the AHPs would exacerbate the existing problem of consumers and policymakers focusing almost exclusively on premiums rather than balancing them against what is offered in the policy.

Gregory A. Freeman

Gregory A. Freeman is a contributing writer.

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