Nov 15, 2018 - 4:00pm

Quick Take: Your Primer on Association Health Plans

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Earlier this year, the Trump administration issued a new rule expanding what are known as Association Health Plans (AHPs), which will allow small businesses to offer their employees the same type of coverage as larger companies. These new AHPs enable small businesses and self-employed Americans to essentially band together, whether by industry or geography, to enroll in a more affordable health plan that will cover more employees.

Why does it matter?

The number of small businesses offering health coverage has declined substantially over the years, from 47% in 2000 to 29% in 2016, in part because many entrepreneurs and small employers simply can’t afford to offer high-priced comprehensive plans. Under this new rule, small businesses and their employees will have more choices for coverage, and because new AHPs will cover so many people, the plans will be governed by rules that apply to large group plans under the Affordable Care Act (ACA).

What’s the latest?

Eleven states and D.C. recently challenged this rule in court, arguing that it would undermine the ACA by encouraging healthy individuals to leave traditional markets and buy cheaper plans with fewer benefits. That’s simply not true. We recently filed an amicus brief in support of the rule, explaining that these plans are still subject to the same rules and regulations that apply to large-group market plans under the Affordable Care Act and urging a federal judge to uphold the rule.

Modern Healthcare reports, “Association health plans, one of the options the Trump administration has expanded as an alternative to Affordable Care Act coverage, are a lot more comprehensive than some of their critics had feared.” So far, most of the plans cover pre-existing conditions and most of the ACA’s benefit requirements. Along with that coverage, premiums are in some cases 15%-25% lower than the cost of an individual policy sold through the exchanges, according to plan documents.

Number to know:

400,000. That’s the number of currently uninsured Americans who are expected to attain health coverage thanks to the new AHP rule, according to the Congressional Budget Office. They will be among an estimated 4 million Americans expected to purchase new AHPs.

Our take:

“AHPs are a major step in the right direction for small businesses and the millions of Americans who will now be able to buy lower cost health insurance plans.” – U.S. Chamber President and CEO Tom Donohue (read his full commentary here)

What’s next?

While the new AHP rule will help provide more affordable health coverage options for small businesses, there’s more work to be done to build a more modern, stable U.S. health care system and expand access to affordable health coverage choices for every American. We’ll continue to work closely with the administration and Congress to take further action toward that long-standing goal and ensure this rule is upheld.

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