The Trump administration is taking the final step Tuesday in its plan aimed at making health insurance policies cheaper for some small businesses.
But the move could weaken some of the Affordable Care Act’s consumer protections for those buying these plans and make coverage more expensive for those who remain on the Obamacare exchanges.
The administration is releasing its final rule governing association health plans, which allow small businesses and the self-employed to band together based on their industry or location and buy health insurance. The rule stems from an executive order that Trump signed in October aimed at providing alternatives to the Affordable Care Act, which it is bent on dismantling.
The rule allows association health plans to be regulated in the same way as large employer policies. That would free them from having to adhere to some of Obamacare’s rules, particularly the one requiring insurers to offer comprehensive coverage. So these plans would likely have lower premiums, but also provide fewer benefits — which could leave sicker and older workers out in the cold. Also, the offerings could be less attractive to young women if they don’t cover maternity benefits.
Plus, the proposed regulation would allow associations to base an employer’s rates on the gender, age and industry of its workers, which could leave firms with many younger men paying less, but those with older workers and women saddled with higher premiums. Currently, the Affordable Care Act bans insurers from basing premiums on gender or industry and limits the amount that can be based on age.
However, plans would not be allowed to set premiums based on workers’ health status, which critics of the executive order had feared. It also maintains state regulators’ oversight of these policies.
Consumer watchdogs are concerned that the association health plans will siphon off younger and healthier workers, leaving older and sicker Americans in the Obamacare exchanges. This will raise the rates of those who remain in the exchanges. Many patient advocacy groups have also spoken out against the Trump administration’s move, concerned it could lead to more instability in the individual and small business markets and leave policyholders paying more for needed care.
Association health plans, which have existed for decades and have a history of fraud and insolvency, have long been a favorite tool of Republicans. Several industry groups — including the National Retail Federation and the International Franchise Association — praised the proposed rule that was released in January.
The Trump administration is also readying the final rule for short-term health plans, which would serve as another alternative to Obamacare. Officials are expected to allow these plans to be sold for up to a year, as opposed to the current 90-day limit.
Short-term plans don’t have to adhere to Obamacare’s regulations so consumers would have a wider array of options with lower monthly rates. But these policies can exclude those with pre-existing conditions or base rates on a person’s medical history. They can also offer skimpier benefits so policyholders may have to pay more out of pocket if they actually need care.