New Report Supported By The New York Community Trust and United Hospital Fund Examines Threat Posed By The Federal Association Health Plan Regulation
A proposed federal rule on Association Health Plans (AHPs), expected to be finalized soon, could further destabilize New York’s small and individual health insurance markets by making it easier for sponsors to create healthier groups for coverage that are exempt from benefits and rating rules established by the Affordable Care Act (ACA), according to a report released today by United Hospital Fund.
The new HealthWatch report, The Other Shoe Drops: Federal Association Health Plan Regulation Is Next Threat to Coverage in New York, explains how the proposed Trump Administration rule could greatly expand AHP operations in New York through U.S. Department of Labor reinterpretations of arcane terms such as “bona fide” organization and “commonality of interest.” These new definitions would make it easier for AHP sponsors to package groups of “working owners” or small groups together as if they were a large employer group. Sponsors of these newly created large groups could then offer cheaper coverage to younger or healthier individuals and small groups by factoring in their age, gender, group size, and occupation—prohibited in the individual and small group—or by offering stripped-down benefit packages that would not have to meet mandated essential health benefit standards. That could leave a sicker population with comprehensive coverage in the regular market, at increasingly higher premiums, a dynamic known as “market segmentation.”
“The designers of the ACA realized that, if you want to increase coverage through the private insurance market, you need to make certain that the underlying risk pools are strong and stable in the long term,” said Peter Newell, director of UHF’s Health Insurance Project and author of the report. “That keeps premiums more affordable, and makes health plans willing partners...