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    Expansion of association health plans: 6 things to know about Trump’s proposal


       3.  AHPs can play a role in decentralizing health insurance, as well as opening it up to more choice and more competition. “Indeed, between AHPs, health savings accounts [HSAs], and voluntary coverages along with the traditional group plans, there is an exciting opportunity to totally reshape health insurance,” Sarich says.

    Sarich cites MediShare,  a Christian-faith-based individual health plan.

    “It is financially sound, follows the state and federal regulations, and is a very viable program for the individual/family,” explains Sarich. “Take this MediShare concept to a large-scale national program that incorporates features of accountable care, with the proposed CVS/Aetna merger in mind, and plans can and will be developed to serve a diverse group of individuals and businesses,” he says. 


    The types of associations that could sponsor insurance plans is almost limitless, according to Sarich.

    “There are national and regional trade associations for virtually every type of business category and social category imaginable,” he says. “Keep in mind that with AHPs there is no longer community rating, so plans will be priced based on their risk profile, which is very likely to be actuarially a lower cost than community rated plans.

    “Then consider a health insurance marketplace built around health insurance exchanges,” Sarich continues. “These private exchanges would have dozens if not hundreds of plans that an individual or a broker/agent can peruse to find the plan that works best for the patient. Aon-Hewitt has built an exchange that conforms to the Obamacare requirements, and which functions well.”

    Wolfson agrees that the definition of “association” will be broadened to permit unrelated professions and groups to join, and the rule opens the door to nationwide, single worker-class associations (e.g., lawyers or plumbers) that may be much less restricted by state regulations.

    “Contrary to earlier concerns, this will not create an unbridled elimination of the individual market, though it does piggyback conveniently on the new tax law that erases the mandate of Obamacare,” Wolfson says. “The three most popular elements of the ACA will remain in place: no pre-existing conditions, no lifetime dollar limits on services, and plans must cover ‘children’ up to age 26. Under the rule, AHPs would not have to offer the palate of ‘essential benefits’ required by Obamacare and could permit highly segmented benefits that may not include certain higher cost services. There are credible concerns that expanded AHPs may dilute the individual market risk pools, resulting in higher premiums.” 

       4.  It could raise risk pool concerns


    “While this rule provides additional flexibility to small businesses and sole proprietors, shifting enrollees out of the individual and small group market, may lead to further instability and risk pool concerns for those markets going forward,” Sloan says.

    5.  It will still require infrastructures to recruit and manage members, and third-party competencies to establish care networks, negotiate and reimburse providers of care, and perform the myriad and essential administrative, fiscal, and compliance functions. 

    “For these, associations created under the new rules may turn to traditional financial services corporations that own and run insurance and managed care products to perform third-party administration [TPA] functions,” says Wolfson.

    “In this respect, AHPs could take on an insurance brokerage role, with an eye toward optimization of both membership size and risk,” Wolfson says. “But larger associations may be able to become their own health benefit purveyors, competing, especially locally, for pricing and service deals with care providers. In this regard, large hospital/healthcare systems—even some academic health systems—will be encouraged to create AHPs, sculpting new, competitive landscapes and even opportunities for hybrid collaborations with the likes of entities such as the proposed CVS/Aetna fusion. But the devil will always be in the actuarial and membership details.”

       6.  It can potentially shift buying power.

    AHPs will bring increased buying power to employers, according to Schindelman. “Not only will they be able to negotiate with traditional health plans from a position of greater strength, but, more important, AHPs will be well-positioned to work directly with healthcare providers,” he says. “It’s providers, not traditional health plans, that can best influence healthcare cost and quality."

    Also, by working together, Schindelman believes that employers will learn things that are more difficult to learn independently. “For example, they’ll have more data about healthcare costs and quality that will be helpful when deciding which health plan to purchase and which providers to work with,” he says.

    “Healthcare executives should be prepared to address questions pertaining to the potential value of association health plans and whether or not the new rule will create or hinder value-driven solutions for their clients,” Schindelman says.

    Best case scenario, the proposal could lower costs for small businesses and open up coverage to more individuals. Worst case, it could drive up costs for those who most need insurance, or create financial distress when an unexpected health crisis occurs. The DOL’s notice of proposed rule making was published in the Federal Register on Jan. 5, 2018, and is available for public comment for 60 days.


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