The Trump administration just finalized new rules which will allow for the sale of skimpier health plans. The administration says the new rules will make it easier for individuals and small businesses to band together to get plans that don’t offer a full set of health benefits. You may want to start saving your aluminum.
Association Health Plans
The plans being promoted by the Trump administration are called “association health plans.” Small businesses and sole proprietors will be able to band together to buy coverage from such plans, starting in September.
March 30, 2019 — U.S. District Judge John D. Bates concluded that the Trump administration’s policy changes to push skimpy associated health plans were unlawful and must be set aside.
♦ These new plans will not have to abide by Affordable Care Act requirements that mandate insurers offer a group of 10 essential benefits. It is expected that these plans will skip coverage for expensive services such as mental health, emergency and maternity care.
• The new plans will still have to provide protection for people with pre-existing conditions, older people and woman. However, plans will be able to drop maternity coverage much like the old days of rationed benefits.
The new rules will allow employers in the same area to join together under a plan. The plans may be marketed across state lines but within a geographic region.
Employers and self-employed individuals in the same industry would be allowed to join together – auto repair shops or plans sponsored by the local Chambers of Commerce.
The concept of associated plans is not new. They were tried in the past with some pretty bad experiences. The plans in the past were poorly regulated, causing great loss for many consumers. Many plans went bankrupt resulting in millions of unpaid claims. The administration promises to get it right this time.
♦ The administration claims that consumers will now be able to purchase high quality insurance at a more affordable price.
Consumer groups point out that these new plans can be designed to easily fool people into believing they are purchasing more comprehensive coverage than they really are. It is expected that unscrupulous insurance companies will target small businesses eager to buy anything at lower cost.
♦ A second rule change is in the works to do much the same to short-term health plans.
Update: August 1st Here we go!
A new rule was just announced. Short-term plans will no longer be short.
Instead of being limited to 90 days, the plans may last 365 days and can be renewed; potentially providing coverage for up to three years.
Both associated health plans and short-term health plans will be able to offer skimpier benefits. Both have been widely criticized by patient advocates, physician and hospital groups and many health insurers and state regulators.
Most experts have commented that loosening health insurance rules might make health coverage more affordable for some healthy people. The downside is that costs will go up for people who need more comprehensive benefits.
• States will have the power to regulate these plans and thereby limit potential harm they may cause. Some states are expected to require association health plans to continue to offer more robust health benefits, while other states are expected to turn a blind eye. For sure, this will be a consumer beware moment.
♦ The main objective of this rule change does not appear to help people but rather to destabilize the Obamacare marketplaces.
These associated plans are expected to syphon off healthy people. As many as 4.3 million people could leave the individual and small-group markets to try these new plans. These people may find a cheaper premium but it will be at the cost of increased risk.
♦ Premiums are expected to increase substantially for everyone else.
People not able to join an associated plan or older and sicker people who need and use more benefits will have no choice but to stay with a Marketplace plan.
In the end, it comes down to who actually decides to play in this market. Insurers are going to need to craft policies that bring them a profit. State regulators are going to have make sure people are not cheated. Consumers are going to want to buy them.