Rand Paul’s ‘Association Health Plans’ go Into Effect


Senator Rand Paul


A healthcare proposal went into effect quietly without much attention this past week. Senator Rand Paul (R-KY) had been working with President Trump and Secretary of Labor R. Alexander Acosta for months after criticizing the lackluster Obamacare repeal last year, characterizing it plainly as "a really crappy bill."

In a press release, Sen. Paul cited how he had worked extensively with the administration to develop the rule expanding access to Association Health Plans. The intent was to put “more power back into the hands of the American people to choose the health insurance plan that best meets their needs at a price they can afford.” According to the press release, the rule “would expand the types of groups that can form an AHP and allow for membership across state lines.”

The Labor Department's announcement sums up what problems AHPs are meant to solve and how they are meant to work:

"The percentage of small businesses offering health care coverage has been dropping substantially. For the self-employed, the individual market exchanges do not offer affordable coverage either; premiums more than doubled between 2013 and 2017 with deductibles increasing even more.

This reform allows small employers – many of whom are facing much higher premiums and fewer coverage options as a result of Obamacare – a greater ability to join together and gain many of the regulatory advantages enjoyed by large employers.

Under the Department's new rule, AHPs can serve employers in a city, county, state, or a multi-state metropolitan area, or a particular industry nationwide. Sole proprietors, as well as their families, will be permitted to join such plans...These plans will also be able to reduce administrative costs and strengthen negotiating power with providers from larger risk pools and greater economies of scale...

The Congressional Budget Office (CBO) estimates that millions of people will switch their coverage to more affordable and more flexible AHP plans and save thousands of dollars in premiums. CBO also estimates that 400,000 previously uninsured people will gain coverage under AHPs."

The rule predominantly benefits those who are self-employed or work for small employers where affordable health insurance has been harder to come by since the passage of Obamacare. By leveraging the buying power of the larger association, these parties can enjoy advantages normally only available to larger employers.

Advocates of the rule say the plans offer an option to consumers who don’t qualify for federal subsidies, a group that has been hit hard by skyrocketing premiums on the exchanges created by the health care law. The newly expanded association plans will not be allowed to charge more or deny coverage to people with pre-existing conditions. But the policies are not required to offer the law’s 10 essential health benefits. Critics maintain that will allow plans to exclude services that would attract sicker consumers.

Any existing AHPs are allowed to adopt the new requirements if they seek to expand geographically, but would otherwise be unaffected. For new AHPs, the ability to expand across state lines affords new opportunities in markets to which they otherwise may not have had access.

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