Buzz
The Trump administration has broadened access to association health care plans, a strategy aimed at lowering health insurance costs, though it may inadvertently lead to higher expenses for many individuals in the market.
Association Health Plans (AHPs) are temporary health plans offered by trade or professional organizations, mainly used by small businesses. The new regulation expands eligibility for these plans and exempts more of them from complying with the Affordable Care Act's standards for comprehensive insurance.
For instance, these plans are not required to follow the ACA's rating rules, which prevent insurers from adjusting premiums based on gender, age, or health condition. They are also not obligated to provide the Essential Health Benefits, such as preventive care, emergency services, maternity care, prescription drugs, hospital stays, and mental health services, which are mandatory for ACA-compliant plans.
Impact of the New Regulation
If you're curious about what it doesn't cover, that's the whole idea.
This move is part of the administration's strategy to reduce insurance costs. While it may lower premiums for those enrolled in AHPs, overall costs could rise if you need significant medical care, as out-of-pocket expenses will increase—particularly for those who are sick, older, or women planning to get pregnant (insurers can adjust premiums based on age, gender, and occupation, but not health status).
It's similar to buying a cheap used car: the initial price seems attractive, but soon you're spending hundreds more on repairs to make it functional.
"We anticipate that this new federal law will lead to an increase in insurers denying medical claims and a rise in medical bankruptcies, both of which have decreased since the implementation of the health law in 2010," said Frederick Isasi, executive director of the Families USA advocacy group, a left-leaning organization, in an interview with CNN. Industry groups, however, are supportive of the decision.
Although the Department of Labor, which is overseeing the rule, has provided little information on the possible outcomes, external reports suggest that while AHP enrollees may benefit from lower premiums (but higher out-of-pocket costs), the overall individual market will face rising costs, leading to a greater number of uninsured individuals.
According to Avalere, a health consulting firm, premiums in the individual market could rise by up to four percent by 2022 as healthier and younger workers transition to AHPs. This increase in premiums could result in approximately 140,000 more people being uninsured in the individual market within the same period, as they are priced out. For those enrolled in AHPs, Avalere projects annual premiums could be as much as $10,800 less than in the individual market, depending on the coverage.
Clearly, this is a significant saving for those who qualify and stay healthy. However, for others in the individual market or those with medical needs not covered, it could have the opposite effect.
