Trump's new health insurance option offers lower premiums

Henrietta Strickland
June 22, 2018

By effectively shifting small-business coverage into the large-group market, it exempts such plans from ACA requirements for 10 "essential" health benefits, such as mental health care and prescription drug coverage, prompting warnings of "junk insurance" from consumer advocates.

The U.S. Labor Department on Tuesday said it plans to issue a rule that would let more small firms and individuals form association health plans, or AHPs.

President Donald Trump has long asserted that promoting the sale of health insurance across state lines can bring down premiums without sacrificing quality.

"These self-employed professionals are forced to purchase health insurance in the more volatile individual insurance market, which tends to offer fewer choices at drastically higher costs", Illinois Realtors President Matthew Difanis wrote.

Republicans have praised the new rule as providing cheaper health insurance options to those who can not afford Obamacare plans or who do not want them.

Republicans repealed the ACA's so-called individual mandate, the requirement that most Americans purchase health insurance or else pay a fine, in an overhaul of the USA tax code previous year. Enrollees are likely to be healthier people with higher incomes, who will see lower premiums than in the ACA's markets, the CBO said. However, plans within a particular industry can be marketed nationwide.

Now plans for small businesses are required to cover the Affordable Care Act's 10 categories of "essential" benefits, from prescription drugs to maternity and mental health. Republicans and some small-business groups said the administration is providing needed flexibility in the face of rising premiums.

The finalized rule is the Trump administration's most recent effort to provide consumers with alternatives to Obamacare, former Democratic President Barack Obama's signature domestic policy achievement.

After Republicans hit a dead end trying to repeal the Affordable Care Act, the Trump administration has pushed regulatory actions to loosen ACA requirements and try to lower premiums for individuals and small businesses, which now reflect the cost of comprehensive coverage.

In a DOL example, if an association offers benefits to restaurant employees in a specific area, then it can not exclude the employees of a certain restaurant if the business's employees have higher-than-expected care costs.

The Congressional Budget Office estimates that four million Americans, including 400,000 who otherwise would lack insurance, will join an AHP by 2023.

In April, for example, MA regulators settled with Kansas-based Unified Life Insurance Company, which agreed to pay $2.8 million to resolve allegations that it engaged in deceptive practices, such as claiming it covered services that it did not.

Others warn that healthy people may leave existing coverage for these new less-expensive plans.

Critics say the administration's approach will draw healthy people away from the health law's insurance markets, raising the cost of coverage, which is subsidized by taxpayers.

"States maintain significant authority to impose additional rating rules on insured AHPs through regulation of the underlying insurance policies obtained by AHPs to fund the benefits they provide, and may also impose similar requirements for self-insured AHPs", DOL said.

State insurance regulators have been concerned about association health plans because similar plans in the past had problems with financial solvency and fraud.

The new plans will be phased in, starting in September.

Other reports by Click Lancashire

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