New York Estate Planning & Elder Law Blog
The U.S. Department of Labor is expected to release new guidelines that will allow small businesses to band together to purchase insurance for their workers with “association health plans” that could end up disrupting healthcare markets. The once common association health plans were attractive to scam artists that took advantage of the states’ inability to regulate these types of health care planes, leaving hundreds of thousands of patients with unpaid medical bills totaling over a quarter of a billion dollars.
Fortunately for patients, the Affordable Care Act (ACA) impose requirements on healthcare companies that effectively prevented association health plans from doing business because of the types of coverage plans needed to offer. For the most part, health insurance plans must offer coverage for the 10 essential health care benefits which include emergency services, habilitative and rehabilitative services, inpatient care, outpatient care, maternity and newborn care, mental health and addiction treatment, laboratory services, prescription drugs, and preventative services and chronic care treatment.
However, the loosening of these regulations could allow association health plans to become big enough that they may be considered “large group” insurance plans, which cover more than 50 individuals. These large group insurance plans are subject to far less state regulation and fewer ACA requirements than small-group or individual plans. In particular, large group insurance plans do not have to offer coverage for mental health services and other vital care mandated by the ACA.
Furthermore, large group association health plans are able to select the most desirable enrollees to their programs, those being the least likely to need medical care, which could cause carriers to pull out of markets altogether. Washington, D.C.-based research and consulting company Avalere estimates the rules changes could potentially draw 3.2 million enrollees from small group and individual markets in just four-years and increase premiums in these markets by as much as 3.5 percent.
The hope is that most, if not all, of these large group association plans will purchase insurance from traditional carriers instead of paying out claims from their own funds, one of the factors that lead to the collapse of these types of plan in the past. Many conservatives who championed the rule changes believe that the new relaxed regulations will help small businesses decrease their operating costs by allowing them to band together and purchase lower cost insurance for their employees.