With AHPs not required to provide the same coverage as ACA plans, they are free to reduce premiums to whatever gets people to sign up, he says. They will reduce benefits accordingly, but people do not focus on that aspect until it is too late, he says.
"They're allowed to go back to the pre-ACA market in which they ask how you want to pay for the policy, and they'll give you a plan for that price. It may not cover much, but it will appeal to those who don't expect to need a lot of healthcare services in the coming year," Kominski says. "That will siphon off those individuals into association health plans and leave people with greater health risks and preexisting conditions in the exchange."
Opposition to AHPs
That adverse selection is a key reason insurers oppose the proposed change. Insurance trade group America's Health Insurance Plans released a statement saying it was "concerned that the changes proposed would lead to higher prices and weaker consumer protections in the small group and individual markets, where nearly 40 million Americans get their coverage."
The proposed rule is an intentional effort to destabilize the health insurance market, Kominski says.
"It is apparent that this is the [Trump] administration's strategy, and Congress is willing to go along with it," he says. "Congress isn't even needed to go along with it, because this is being done through the administrative law process rather than creating new legislation."
Newly formed AHPs could bring in enough new people that insurers will have to scramble to make sure they have enough network coverage, says Bruce Carver, associate vice president of payer services at MedeAnalytics, which provides data analytics to the industry.
"As member coverage crosses state lines, regional health plans will need to consider if they have appropriate network coverage to meet access requirements. This may also increase competition in some markets that have few options," Carver says. "This may also have the potential to drive down costs."
Gregory A. Freeman is a contributing writer for HealthLeaders.