On Tuesday, June 19, the U.S. Department of Labor (DOL) released the final rule that will expand access to association health plans (AHPs). AHPs would allow small businesses to band together through a trade association to purchase health insurance across state lines.
The final rule comes as a result of an executive order signed by President Donald Trump in October 2017. In signing the order, Trump said AHPs would “help small businesses overcome this competitive disadvantage by allowing them to group together to self-insure or purchase large group health insurance.”
When it first published the AHP rules in January (subject to a comment period of 60 days), the DOL noted that up to 11 million Americans working for small businesses/sole proprietors and their families lack employer-sponsored insurance and that these 11 million Americans could find coverage under this proposal.
While AHPs have found support among a number of trade associations, including the National Retail Federation, many health advocate groups, such as the American Cancer Society, oppose them. One reason is that AHPs would be exempt from a number of consumer protections mandated by the Affordable Care Act, according to the New York Times. The article noted that AHPs may not be required to provide “essential health benefits” and would likely attract younger, healthier members. This would, in turn, send sicker people to the more expensive insurance plans.
People with serious illnesses like cancer could face “ever-increasing premiums for comprehensive coverage,” Chris Hansen, the president of the lobbying arm of the American Cancer Society, told the Times.
However, when initially proposed in January, the rule stipulated that AHPs cannot charge individuals higher premiums or refuse to admit employees to a plan because of health factors.
Proponents of AHPs think the new rule will be a boon for small business owners who cannot afford traditional coverage. Christopher E. Condeluci, an employee benefits lawyer who used to work for Republicans on the Senate Finance Committee, told the Times: “The new rule will allow national trade associations to offer insurance to their employer members in multiple states. Small employers and independent contractors will be able to get coverage through group health plans, just like the insurance offered by large employers.”
When the AHP rule was first proposed, the DOL stipulated that AHPs would apply only to employer-sponsored health insurance and would allow employers to join together as a single group to purchase insurance in the large group market. “By joining together, employers may reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure, and offer a wider array of insurance options.”
The American Booksellers Association is currently reviewing the just-released final rules and will report on its findings to membership in the coming weeks.