This week, the Trump Administration released a final regulation expanding the use of association health plans (AHP’s), which will be available beginning Sept. 1, 2018. These plans have traditionally been utilized by small businesses and associations banding together to purchase the plans, but the new rule will permit the formation of more AHP’s by eliminating the requirement that associations already be in existence for a purpose other than for the purchase of health insurance. Self-employed individuals will also be permitted to purchase AHP’s through the new rule.   

Under the regulation, AHP’s must offer insurance to individuals with pre-existing conditions and cannot charge these individuals higher insurance premiums based on their health conditions, but they will be permitted to charge consumers higher premiums based on age, gender and location, a significant deviation from the Affordable Care Act’s (ACA)s current patient protections. In another significant difference from ACA plans, AHP’s will not have to provide the law’s 10 essential health benefits (EHB’s), which include prescription coverage and maternity coverage.

The administration has touted the increased availability of AHP’s as a way to help small businesses and self-employed people access cheaper insurance plans that “level the playing field” between insurance rules for large companies and those for small businesses. But groups, including the ATS, are concerned that the proliferation of these cheaper, skimpier plans, including short-term insurance plans, coupled with the elimination of the individual insurance mandate will pull younger healthier individuals out of the market, leaving a larger proportion of older, sicker individuals in a smaller market. The ATS is also very concerned that AHP’s and other plans that do not offer comprehensive benefit coverage will serve to leave people who purchase these plans without needed coverage of respiratory conditions and additionally promote skimpier coverage across markets as plans strive to compete against each other. Consulting firm Avalere Health estimated that the new AHP rule will lead to lower insurance premiums by 2022 for those who purchase these plans, but will increase premiums across the entire individual insurance market by about 3.5 percent, causing 130,000 to lose health insurance within five years.