Association Health Plans Get Assist From Business Groups, GOP

A push to allow small businesses and self-employed business owners to join together in large groups to buy health insurance is seeing early success, despite concerns it could skirt Obamacare protections.

Republican members of Congress have moved a bill through the House that would boost association health plans, which are group health plans covering small employers and self-employed individuals in the same or different industries.

Association health plans offer the benefits of better bargaining for lower prices and better coverage enjoyed by large employers.

The activity comes as small businesses have largely shunned the small group market provided by the Affordable Care Act, and self-employed individuals who make too much money are ineligible for Obamacare’s premium subsidies in the individual market.

A 2019 Congressional Budget Office analysis of a Trump administration rule expanding access to AHPs, which was struck down by a federal judge, estimated that premiums for AHPs would be about 30% lower than premiums for fully regulated small group coverage. Thirty-seven states allow AHPs to operate.

The GOP-backed bill, the CHOICE Arrangement Act (H.R. 3799), includes provisions that would expand access to association health plans. It passed the House last month by a party-line vote of 220-209.

The CBO estimates that after 2028, when the policy would be fully in effect, the bill would increase the number of people with health insurance purchased through association plans by about 200,000 per year.

The measure faces an uphill battle in the Democratic Senate, and the White House said it won’t support it. But the GOP success in the House moves the legislation forward and makes it more likely it could be approved in a future Congress if Republicans retake the Senate or the White House.

The effort has also been accompanied by an intense debate over association health plans and their potential impact on states and consumers.

Rep. Scott Says Plans ‘Skimp’

In a recent press call, Rep. Bobby Scott (D-Va.), the top Democrat on the House Committee on Education and the Workforce, said AHPs “can skimp on essential benefits, particularly maternity care, mental health, and care for substance abuse disorders, in addition to other consumer protections under the Affordable Care Act.”

The National Federation of Independent Business, a supporter of H.R. 3799, disputes the criticisms of AHPs. The bill expands the definition of large employers so that small businesses in different industries and areas of the country could be part of an AHP to get health insurance, which is regulated under the Employee Retirement Income Security Act, Josselin Castillo, NFIB manager of federal government relations, said in an interview.

“An AHP is considered a group health plan for purposes of the ACA and thus is subject to the ACA’s group health plan requirements, that is covering preexisting conditions, government specified preventative care without co-pay, prohibiting annual and lifetime spending limits,” as well as claims appeals and allowing children to remain on parents’ insurance until age 26 and other requirements that go beyond the ACA, Castillo said.

Christopher Condeluci, director of the Coalition to Protect and Promote Association Health Plans, helped draft the association health plan bill.

Association plans aren’t subject to the essential health benefits requirements of the ACA because large employer-sponsored health plans aren’t subject to that requirement, he said.

“Virtually all large employers out there are voluntarily covering the essential health benefits,” he said.

AHPs that cover major medical health coverage are voluntarily covering essential health benefits “because the market demands comprehensive coverage, employees demand comprehensive coverage, and employers offer health benefits to attract and retain talented workers,” he said.

Association health plans with fewer than 51 employees would be exempt from ACA mandates, but states would still have authority to regulate them, Castillo said.

State Regulators Concerned

A June 21 letter from the leadership of the National Association of Insurance Commissioners to House leaders said the CHOICE legislation “would preempt state authority to regulate their small group health insurance markets,” preventing states from protecting consumers, because it treats some association plans as single-employer plans that are regulated by the federal government under ERISA.

The legislation would allow an AHP to charge employer members different premiums based on their risk profiles, which could lead to employers with healthier employees participating in AHPs and those with older, sicker workers that stay in the small group market paying higher rates, the NAIC letter said.

“Any lower cost coverage will be in riskier, more loosely regulated plans and shift costs onto those who remain in traditional small group markets,” the NAIC said.

Condeluci disputed the NAIC’s contention.

“HR 3799 does not amend ERISA’s preemption provision, nor does it amend ERISA’s definition of a MEWA, and therefore, the legislation in no way preempts state law, and AHPs are MEWAs and always will be treated as MEWAs,” he said. MEWAs are multi-employer welfare arrangements that are regulated under ERISA.

Attracting Healthier People

Condeluci also dismissed the argument that the plans could attract healthier people and leave sicker people in the ACA marketplaces.

“Association health plans are comprehensive coverage at an affordable price, and that is going to attract healthy groups to the same extent it’s going to attract less healthy groups. We’re not going to see a phenomenon of just healthy groups being attracted to an association health plan,” he said.

“Most employers that take these, a lot of them have never even offered health insurance to their employees, and they’re not required to,” because they are small companies, Michael Dillon, chief executive officer of Reno, Nev.-based Dillon Health Inc., said in an interview. Dillon Health works with association health plans. “It’s really been a positive thing.”

But Robert Andrews, CEO of the Health Transformation Alliance, said most employers aren’t likely to want to join AHPs because employees may be caught short if their coverage wasn’t adequate.

“Unhappy employees would blame them if they don’t have certain coverages,” he said. The alliance has large-employer members covering about 4 million people in the US.

Virginia Bill Defended

The federal legislative action comes as Virginia seeks to implement a law enacted in 2022 that allows Realtors to join association health plans.

In May, House Republicans criticized a Centers for Medicare & Medicaid Services’s May 31 letter to Virginia Gov. Glenn Youngkin (R) and Virginia insurance commissioner Scott White indicating that Virginia’s HB 768-SB 335 doesn’t comply with the protections of the Affordable Care Act.

The law was passed overwhelmingly by the state General Assembly in 2022. It allows Realtors, many of whom are self-employed independent contractors, to join association health plans.

Macaulay Porter, spokesman for Youngkin, said in an email that “Governor Youngkin disagrees with the Biden administration’s position that real estate professionals and brokers cannot be considered business owners, which is why he signed HB 768 and SB 335 into law.”