What association health plans mean for physicians and their patients

In June, the U.S. Department of Labor expanded access to health coverage options for small businesses and their employees through Association Health Plans (AHPs).

AHPs allow small businesses and self-employed workers to band together by geography or industry to obtain healthcare coverage as if they were a single large employer, thereby providing, according to the Trump administration, more choice, access, and coverage. However, AHPs generally do not cover as much as other health plans, which could spur frustration and concern among both patients and doctors as they learn what an AHP actually covers. 

The American College of Physicians, for one, opposes the introduction of the new plans. “As a physician, I know from experience how crucial it is that patients have access to insurance plans that meet full healthcare needs,” Ana María López, MD, FACP, ACP’s president, said in a statement after the ruling. “This rule will do the opposite.”

Proponents of the new rule argue that it will provide small employers the same opportunity for coverage available to large employers with self-insured plans. “Many of our laws, particularly Obamacare, make healthcare coverage more expensive for small businesses than large companies,” U.S. Secretary of Labor Alexander Acosta said in a statement. 

A history of association plans

Kevin Lucia, MHP, research professor and project director at Georgetown University’s Health Policy Institute, notes that since the 1990s, congressional proposals to create federally certified AHPs have been opposed by a broad spectrum of stakeholders, including the National Association of Insurance Commissioners. Opponents point to a history of association health plans that is rife with insolvency, fraud, loss of consumer protections, and market segmentation.

“Prior to this rule, under federal law, it was only in the rarest instance that an association of small employers could make the claim that they were so tightly connected that they were actually a large employer for the purpose of sponsoring a health plan, and that was the Obama Administration’s stance,” Lucia says. 

Once established, AHPs may offer market coverage locally or nationally, provided the plan applies to members of a shared industry or profession or geography.

Lucia explains that for states, AHPs are important because they are trying to maintain a significant competitive market for insurance. However, if companies gravitate toward plans that have fewer protections or have a regulatory advantage, it leaves other in the insured market vulnerable to higher premiums.

Impact on physicians

Under the new AHP rule, Lucia says, it will be easy to form an AHP and market large group coverage to members. 

He believes this may lead to AHPs offering less comprehensive coverage because these arrangements will not be required to offer coverage that is as comprehensive as what’s required under current law.

“Some AHPs will offer comprehensive plans that work to the [advantage] of their members, but one way you get the cheaper premiums is by offering fewer benefits, which means providers face more consumers with skimpier coverage,” he says. He also notes that past expansions of AHPs have resulted in spikes in scams and insolvencies.

James Schutzer, vice president of JDM Benefits, a New York-based insurance and benefits consulting company, says that AHPs can’t discriminate by age or health status, but they can choose what they offer and who they allow in. In regard to the nondiscrimination provision, Schutzer says the rules generally prohibit discrimination based on the health status for eligibility, benefits, or rates within groups of similarly situated individuals. The concept is that the AHP will create a separate risk pool for these individuals and rate accordingly. This will create problems for doctors because many patients won’t be covered for a variety of things they perhaps once were.

America’s Health Insurance Plans, a political advocacy organization representing commercial insurers, is concerned that expanding AHPs will lead to higher premiums for consumers who depend on the individual or small-group market for their coverage. In a statement released after the ruling, it said: “Ultimately, the rule could result in fewer insured Americans and may put consumers at greater risk of fraudulent actors entering this market.”

All AHPs are required to provide summaries of benefits, so these should be reviewed by patients and their doctors’ offices prior to a visit. Lucia says many patients aren’t going to be pleased with those talks as they will learn of the limitations and not realize what their plans really cover.

A real impact?

Schutzer notes that states still have authority over insurance regulations within their borders pertaining to AHPs and some state insurance regulatory agencies like New York and Massachusetts have released guidance which limit the availability of AHPs. 

Bill Ashley, CEO of Allied National, which provides benefit plans to employers and individuals, believes that AHPs are not going to have much impact on the price of insurance.   

“Any impact AHPs will have is by adjusting benefits or being positioned to appeal to the healthy,” he says. But once people are in an AHP, no one can control what happens, so if injuries or health problems come up, there is no mechanism to deal with changing health status. 

Some of the major carriers, he adds, may see a way to offer plans that compete against the ACA insurance exchange. While not necessarily directly lowering plan costs, it could bring some carriers back to the individual market and that will foster some competition.  

“The academic types are talking like AHPs are going to have traction, but I’m hearing very little from payers to support that,” Ashley says.