The move could continue to chip away at the Obamacare markets by opening up more options.
Carrying out a directive issued last fall by President Donald Trump, the Labor Department proposed a new rule Thursday to govern association health plans.
Trump has touted these AHPs, which allow small businesses and trade associations to team up in groups that buy health insurance together, as among the many ways his administration will rescue Americans from costly provisions of the Affordable Care Act. Critics worry these alternative options could undermine consumer protections.
If looser restrictions allow for skimpier plans to be made available at lower costs, healthy people would be incentivized to leave the ACA market, increasing risk among the pool left behind, as HealthLeaders Media reported after Trump’s executive order in October.
“The regulation would modify the definition of ‘employer,’ in part, by creating a more flexible ‘commonality of interest’ test for the employer members than the Department of Labor” had previously adopted, the proposed rule states.
The amended definition is needed, the administration says, because current regulations on AHPs are too costly and complex.
Others, however, say the savings aren’t worth the cost. Longtime healthcare consumer lobbyist Beth Capell told Kaiser Health News last month that there was a big push in the 1990s to do away with AHPs after a series of plans had fallen apart and workers suffered.
“They were a bad idea then; they are a bad idea now,” Capell said.
Even so, some see the Trump administration’s move as a worthwhile attempt to help the little guys.
“Large employers often are able to obtain better terms on health insurance for their employees than small employers because of their larger pools of insurable individuals across which they can spread risk and administrative costs,” Trump said in his October executive order. “Expanding access to AHPs can help small businesses overcome this competitive disadvantage by allowing them to group together to self-insure or purchase large group health insurance.”
The rule is set to publish Friday in the Federal Register, with public comments accepted for the next 60 days.
Steven Porter is editor at HealthLeaders.