President Trump’s new proposal, stemming from an executive order issued in October, would broaden access to association health plans (AHPs). Up to 11 million people could be eligible, according to the Department of Labor (DOL), which issued the proposed rule.
What are AHPs?
Trump has advocated for AHPs that enable small firms to come together at an association level and pool their employees as a group—with the aim of taking advantage of the additional value and reduced administrative expenses that larger-group plans offer, according to AHIP.
AHPs have been deployed in several forms for decades, principally within states, according to Jay Wolfson, DrPH, JD, distinguished service professor, public health, medicine and pharmacy, and senior associate dean, Morsani College of Medicine, University of South Florida Health.
“But their memberships were narrowly defined, the plans were poorly regulated and many were prone to insolvency due to lack of actuarial soundness. Those weaknesses have been addressed in this new, proposed rule which leverages the AHP concept as an explicit and aggressive federal policy. It is a part of the Administration’s deconstruction and dismemberment the ACA and the encouragement of market-based alternatives,” Wolfson says.
“This is a perfect example of how the new administration is disrupting the established order, moving from three old pillars to three new ones: mandates to choice, regulation to competition, and subsidies to actuarial soundness,” says David Friend, MD, chief transformation officer and managing director of BDO’s Center for Healthcare Excellence & Innovation. “Healthcare executives must be prepared to adapt to a world that is evolving.”
John Sarich, vice president of strategy at VUE Software, a firm that specializes in innovating and automating insurance business processes, agrees.
“The underlying aspect of this reordering of health insurance is to move away from employer plans and get it to a market-driven program,” Sarich says. “Historically, employer sponsorship of health insurance is a product of wage and price controls that were in effect during World War II, but your employer shouldn’t be the most important person in determining your healthcare. I think this last vestige of World War II should end once and for all.”
Analysts believe there are six things to know about the proposed rule:
- The new rule will push companies to become more competitive, “while offering consumers more freedom of choice to select the services they actually need instead of having to opt into a package of health services that may include some they don’t need,” says Friend. “For businesses dependent on regulation, subsidies or mandates in their current form for protection, this is a threat.”
Simeon Schindelman, CEO of Brighton Health Plan Solutions, shares a similar viewpoint. “Giving employers more buying power and the ability to purchase coverage together means healthcare providers will be incentivized to compete for business,” Schindelman says. “This competition would help introduce elements of market forces into healthcare, and lead to lower costs and higher quality of care—since providers will strive to attract more customers.”
2. It could open up the large group and self-insured markets to additional enrollees, “allowing sole proprietors and small employers to band together to purchase coverage, while reducing the number of individuals enrolled in the individual and small group markets. The goal of the proposed rule is to broaden access to AHPs, effectively making it easier for sole proprietors and small employers to have access to AHP coverage,” says Chris Sloan, senior manager, Avalere Health, an Inovalon Company. “This could then have potentially destabilizing impacts on the individual and, to a much lesser extent, small group markets. However, there are still structural barriers to AHPs that may limit the actual impact of this rule.”