New Rule on Association Health Plans Could Weaken Affordable Care Act

The Trump Administration on Tuesday, June 19, unveiled the final rule allowing potentially millions of small businesses and self-employed workers to buy health-insurance plans exempt from many Affordable Care Act (ACA) consumer protections. However, plans will still be barred from discriminating against or charging more for individuals with pre-existing conditions. The American Society of Nephrology (ASN) is reviewing the details of the rule now.

The rule is viewed by critics as “a far-reaching step” by the administration to use its regulatory powers to undermine the ACA. The rule was issued by the Department of Labor due to the department’s jurisdiction over the regulation of workplace health plans as opposed to the Department of Health and Human Services and was undertaken because of an executive order issued by President Donald Trump in 2017.

The rule is intended to make it far easier for small businesses and self-employed individuals to band together and obtain “association health plans” for themselves and their employees. Under the new rule, small companies or self-employed people with a shared industry or geographic location will be able to form an association focused on a business interest and buy insurance. Officials maintain that the new health plans might, for example, appeal to restaurant workers, real estate agents, dry cleaners, florists, plumbers, and painters.

While the associations could not charge an individual higher premiums based on pre-existing health conditions, they could base premiums on other factors, such as age, industry, and employee classification. The new entities would be exempt from many of the consumer protections mandated by the ACA. They may, for example, not have to provide certain “essential health benefits” like mental health care, emergency services, maternity and newborn care, and prescription drugs. A woman could not be charged more within individual plans, but associations with a preponderance of female employees could be charged more overall leading some critics to say that women and older people will pay more, and they say the plans will essentially be able to discriminate against consumers by offering some benefits and omitting others, such as cancer treatments or certain prescriptions.

Labor Secretary Alexander Acosta said Tuesday that "this expansion will offer millions of Americans more affordable coverage options." The Secretary said that as many as 4 million people will gain coverage under the new plan offerings in the coming years including 400,000 people who previously did not have insurance coverage. These predictions mirror those released earlier this year by healthcare consulting firm Avalere Health. Avalere predicted that as many as 4.3 million people will leave the individual and small group insurance markets to enroll in association health plans over the next five years.

The final rule broadens the definition of an employer under the Employee Retirement Income Security Act of 1974, or ERISA, to allow more groups to form association health plans and bypass ACA rules. ERISA is the federal law that governs health benefits and retirement plans offered by large employers.

A coalition of 17 Democratic attorneys general criticized the proposal as an “unlawful attempt to accomplish by executive rulemaking changes in law and policy that lie within the power of Congress.” As a result, legal challenges are expected.

However, Republicans and some retail and restaurant organizations praised the proposal.

More information on the rule from ASN to follow.