By Andy Miller, Georgia Health News
President Trump signed an executive order Thursday that would potentially ease rules on “association health plans’’ and on the sale of short-term, low-cost insurance policies.
Because federal agencies must develop the regulations and guidance for these changes, no significant changes will occur for months.
Trump said Thursday that “with these actions we are moving toward lower costs and more options in the health care market, and taking crucial steps toward saving the American people from the nightmare of Obamacare,” more formally known as the Affordable Care Act.
Critics have warned, though, that such actions could attract the healthiest customers to the newly structured plans through lower premiums and stripped-down coverage, and thus destabilize the more regulated health plans.
These new health plans could avoid some currently enforced requirements of the ACA, critics say.
Still, Georgia insurance experts say the eventual changes to association health plans probably won’t have a major impact on the overall insurance market.
Association health plans have existed for decades. They basically are a form of insurance in which small businesses of a similar type band together through an association to negotiate health benefits.
“If these plans can assemble groups with lower [health care] risks, they can get lower premiums,’’ Bill Custer, a health insurance expert with Georgia State University, told GHN on Thursday.
“You can segment your group from other groups,’’ he added. “A trade association for lifeguards would be healthier and would have lower premiums.”
Critics, meanwhile, say older, sicker people would have to resort to the more regulated plans in state insurance exchanges set up by the ACA. That could cause premiums to increase more rapidly for those groups.
Laura Harker of the Georgia Budget and Policy Institute said that if regulations to expand association health plans and short-term health plans are implemented, Georgia’s health insurance exchange would see less enrollment and even higher premiums.
“This is because the association health plans and short-term plans offer less coverage and are not held to the essential health benefits standards in the Affordable Care Act [exchange],’’ she said. “So younger and healthier people would enroll in these cheaper and skimpier plans, leaving a sicker and older pool of people in the [exchange]. And the people enrolled in the association health plans would lose consumer protections such as current laws protecting people with pre-existing conditions from being charged more.’’
Custer said the eased rules on association health plans may not create a large fissure in the insurance market. “Are there enough of these groups to significantly affect this market? I don’t think so,” he said.
But Custer noted that some association plans in the past have failed “because they didn’t have the money in the bank to pay claims,’’ He added that to be effective in the future, “they would have to have financial reserves to pay claims.”
Russ Childers, an Americus health insurance agent, told GHN that people will join association plans “if it’s less expensive than their other choices.’’
But as members of the association plan get sicker, Childers said, “it gets more expensive, and healthy people could leave it.”
“It works well to start with,’’ he said. “These things usually hit a point and spiral downward.”
The Trump order also aims to expand the availability of short-term insurance policies, which offer limited coverage as a bridge for people between jobs or young adults no longer eligible for their parents’ health plans. The Obama administration ruled that short-term insurance may not last for more than three months. Trump wants to extend that to nearly a year.
Some consumer advocates warn that association plans and short-term policies are generally less generous with benefits — and could leave some unwary consumers stuck with large medical bills. Such plans might not cover maternity care, for example, or prescription drugs, Kaiser Health News reported.
Additionally, short-term plans can exclude paying for any pre-existing medical conditions, something the ACA bars for all other types of insurance.
Trump’s initiative is supported by business groups that see association health plans as a possible way to provide more affordable health insurance to their members, the New York Times reported. These include the National Federation of Independent Business, the National Association of Wholesaler-Distributors and the National Restaurant Association.
But consumer groups and the National Association of Insurance Commissioners have opposed association health plans because they could be largely exempt from state regulation, the Times reported.
Georgia’s insurance commissioner, Ralph Hudgens, a longtime ACA critic, declined to comment Thursday on the Trump order.
Association health plans can “cherry-pick healthy groups,” making it more difficult for less healthy groups to find affordable coverage, the National Association of Insurance Commissioners told Congress this year, the Times reported.
The U.S. Chamber of Commerce said short-term policies “serve an important purpose for consumers” who are between jobs.
Kaiser Health News reported that the White House directive also instructs agencies to consider new regulations or guidance to:
** Permit the practice of providing a tax-free employer contributions through health reimbursement accounts that workers could use to buy individual market plans. The Obama administration had barred that practice. This adjustment might result in more employers dropping job-based coverage and simply giving workers money to buy their own plans.
** Report on steps that federal and state governments could take to “increase choice and reduce consolidation” in the health care market. A senior administration official said Trump is concerned about the growing number of regions served by only one or two insurers or hospital systems.