AHPs exist today, but small employers are treated as such, which means they obtain health insurance premiums that are regulated by their state and based on their employer size.
Under this Executive Order, the definition of employer would change, so small employers and self-employed individuals could band together and be treated as a large group, and in theory be offered more health insurance plan options, including across state lines. These health insurance plans would primarily be regulated by the federal government as self-funded plans are, removing most state regulation.
Proponents argue that premiums would be lower because the risks and administrative costs would be spread across a larger pool of people, and insurance companies would compete aggressively for the business. Employers would welcome having someone else to handle the administration, which trade groups may do for them. If allowed, AHPs could also lower costs by refusing to accept sicker or older groups.
On the other hand, the expansion of AHPs could potentially degrade future health insurance plans. By allowing AHPs to be regulated as large group health plans, the standard or essential health benefits set by the ACA and present currently for small employers and individuals could be removed. This means plans could emerge that do not cover prescription drugs, or perhaps without mental health benefits. While these plans would certainly be cheaper, they could lead to the creation of two parallel insurance markets.
Some experts, including the American Academy of Actuaries, are concerned that AHPs would segment the existing population pool, causing an unlevel playing field and thus destabilizing the remaining group and individual markets. While some premiums would decrease, other premiums could increase exponentially, especially if the national or trade associations discriminate on the sicker and older populations. According to Forbes, “In shared risk, there are no ways to lower costs for some people without significantly raising the costs dramatically for others.”
AHPs also have a past history of abuse and fraud. AHPs have left employees with unpaid medical claims because the plans were not administered properly, and they are not regulated by the state insurance regulations.
The future of health insurance is uncertain with the expansion of AHPs, but we will know more about the potential impact when the Department of Labor releases their initial guidance, expected within 60 days of the executive order, about mid December. Fall River Employee Benefits is following this Executive Order and all related regulations closely to bring you the most up-to-date information.
If you have any additional questions on how AHPs could impact the future of your health insurance benefit plans, please contact us. Also, be sure to join one of our webinars on December 6th and 12th to learn the latest details about AHPs, the tax plan, and other items helpful to planning for your 2018 benefits year.
And for more reading, check out some of our sources:
Link to Executive Order: https://www.whitehouse.gov/the-press-office/2017/10/12/presidential-executive-order-promoting-healthcare-choice-and-competition
