President Trump Signs Executive Order Allowing Association Health Plans

Printer-friendly versionPrinter-friendly version

On October 12, President Donald Trump signed an executive order to expand access to association health plans (AHPs), which would allow small businesses to band together through a trade association to purchase health insurance.

Advocacy logoIn the order, Trump points out that large businesses are able to obtain better terms on health care and contends that AHPS will “help small businesses overcome this competitive disadvantage by allowing them to group together to self-insure or purchase large group health insurance.”

The order does not offer specifics, but instead states that, within 60 days of the order, the “Secretary of Labor shall consider proposing regulations or revising guidance, consistent with law, to expand access to health coverage by allowing more employers to form AHPs.”

The National Retail Federation hailed the executive order. “NRF is a longstanding supporter of association health plans,” NRF Vice President for Health Care Policy Neil Trautwein said. “We welcome the administration’s move because associations can bring necessary competition to underserved insurance markets. We look forward to working with state retail associations to determine how best to move forward on AHPs.”

The American Society of Association Executives (ASAE) is taking a wait-and-see approach though, on principle, ASAE supports AHPs. “ASAE is studying the executive order closely and we will be looking for more details about how these new rules would work,” ASAE President and CEO John Graham said in a statement. “ASAE has long believed that association health plans could expand health care choices for small businesses and franchise owners if federally regulated. But how the administration defines an association and how DOL and other agencies rewrite existing rules will be important questions to answer.”

Not all small business organizations were supportive of the executive order. John Arensmeyer of the Small Business Majority criticized the order, saying it was bad for small business. “While President Trump’s order would make it easier for a few select small businesses with younger and/or healthier employees to purchase association health plans that might be cheaper in other states,” he stressed, “the tradeoff is that this would result in the emergence of parallel insurance markets for small businesses, leading to major spikes in premiums for small firms that remain in the small-group market.”

According to media reports, the order came at the urging of Senator Rand Paul (R-KY), who had been working with Trump on expanding AHPs for several months.