Such plans are likely to attract many Medicaid enrollees even though they lack the comprehensive coverage that those sicker-than-average enrollees need.
March 20—Congressional Republicans and small-business advocates this week rejected hospital concerns that proposed rules to allow a proliferation of association health plans (AHPs) would produce a range of problems.
In January, the U.S. Department of Labor (DOL) released a highly anticipated proposed rule that would significantly expand access to AHPs.
The rule would make it easier for an association to be considered a single multiemployer plan under the Employee Retirement Income Security Act (ERISA). Existing associations could continue to offer AHPs, but the proposed changes would enable more AHPs to be regulated under ERISA and rules for large-group health plans. That change could increase the number of plans that are exempt from many of the Affordable Care Act’s (ACA’s) coverage mandates and other standards.
“As a result, an AHP also could create less desirable benefit packages, such as not covering women’s health services for an occupation primarily held by women, in order to dissuade particular groups of individuals from enrolling in the AHP without explicitly discriminating against them,” Tom Nickels, a lobbyist for the American Hospital Association (AHA), wrote in a letter on the rule. “Therefore, this policy would still leave populations at risk of having less access to coverage.”
AHA urged the Trump administration to drop the proposed rule and look for other ways “to reduce costs and improve health plan choices for individuals and small businesses.”
The Federation of American Hospitals (FAH) urged changes to ensure that AHPs do not engage in discriminatory practices. FAH recommended applying the ACA’s essential health benefit (EHB) requirements, rate reforms, guaranteed-issue rules (including marketing standards), and single-risk-pool requirements.
“Before proceeding to finalize the proposed rule, at a minimum, DOL should review each state’s approach to regulating AHPs to learn what types of oversight are necessary to prevent and mitigate AHP insolvencies and fraud and how those activities can be executed given DOL’s current staffing levels,” Chip Kahn, president and CEO of FAH, wrote in a letter.
America’s Essential Hospitals (AEHs), which represents safety-net providers, noted that the rule may qualify many Medicaid-enrolled workers to enroll in AHPs. Because such enrollees are both sicker and more dependent on the extensive services offered by safety-net hospitals, DOL should ensure that all AHPs provide “all necessary services to covered individuals,” Bruce Siegel, MD, president and CEO of AEH, said in comments on the rule.
The Association of American Medical Colleges (AAMC) commended DOL for applying HIPAA and ACA health nondiscrimination rules to AHPs but cautioned that those rules will be insufficient to protect coverage for people with preexisting conditions.
“While the nondiscrimination rules prohibit overt exclusion from coverage based on pre-existing conditions, lifting standard benefit requirements for AHPs, such as EHBs, will allow an AHP to design a plan with benefits so meager as to naturally exclude those with health needs,” Janis M. Orlowski, MD, chief healthcare officer for AAMC, wrote in a letter to the administration.
Such hospital concerns gained no traction among the Republican majority during a March 20 hearing on AHPs.
“This recent action by DOL presents an opportunity to examine the department’s plan to expand small-business access to affordable healthcare options, and thereby decrease the number of uninsured individuals,” said Rep. Tim Walberg (R-Mich.), chairman of the House Education and the Workforce Committee’s Subcommittee on Health, Employment, Labor, and Pensions.
Small-business advocates also rejected the hospital concerns. For instance, Michael McGrew, CEO of McGrew Real Estate in Lawrence, Kan., spoke to the congressional panel on behalf of the National Association of Realtors. He said concerns about the lack of ACA coverage requirements for AHPs are “misplaced due to existing applicable consumer protections and state regulations.”
For instance, in a fully insured large-group AHP, state-level benefit mandates also apply, meaning benefits and services that insurance contracts are required to cover must be included in the AHP, he said.
Catherine Monson, CEO of FASTSIGNS International and a representative of the International Franchise Association (IFA), cited an IFA member survey that found 65 percent of respondents did not provide healthcare coverage to their employees. Ninety-two percent of that group said the cost burden kept them from offering coverage, and 100 percent said they would provide coverage if they could do so through an AHP.
“Taking this important step will allow trade associations or multiple small employers to come together and pool their employees in order to buy quality health insurance, generating similar quality and savings as organized labor and large corporations do in the large-group insurance market,” Monson told the panel.
A Continuing Challenge
The National Association of Insurance Commissioners and the American Academy of Actuaries have warned that expanding AHPs could attract healthier people and leave sicker people to access individual and small-group market plans. If that were to occur, the price of individual and small-group products would increase given the concentrated risk pool, ultimately harming the viability of those markets. A February Avalere analysis concluded that up to 4.3 million people who are enrolled in the individual and small-group markets would shift to AHP coverage under the rule by 2022.
But it was unclear how to ameliorate the growing coverage problem for employees of small businesses, which pay on average 18 percent more per employee than their larger counterparts and usually end up with less-comprehensive coverage, said John Arensmeyer, founder and CEO of Small Business Majority.
One of the main reasons why employers offer healthcare coverage to their employees—even through an AHP—is to attract and retain talent, said Christopher Condeluci, principal at CC Law and Policy.
“A strong argument can be made that to remain competitive among their peers, employers—especially those offering health coverage through an AHP—are going to make sure that their plan offers a comprehensive level of health coverage so they can attract and retain talented workers,” he told the panel.
Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare