The Trump administration’s proposal to expand the availability of Association Health Plans (AHPs) could further weaken the state health insurance exchanges that were created by the Affordable Care Act (ACA).
Supporters of the proposal like the additional choice in health plans that will be added and see a potential for decreasing costs. Opponents argue that AHPs are not subject to many of the rules and protections that are included in the ACA.
In January, the Labor Department proposed rules allowing wider use of these kind of health and welfare plans which can be established by both employers and employee organizations, such as the well-known Teamsters plans (AA, 2-25-18, P. 5).
DOL said the changes would expand health coverage by creating more affordable ways for small businesses to offer coverage to employees than the coverage offered under ACA.
Opponents believe that the migration of healthy individuals from the ACA exchanges to AHPs would undermine the stability of the exchanges, which could be left with fewer, older enrollees and those with preexisting conditions.
The fear is that this would increase exchange premiums, which are already rising substantially, driving more people to exit the ACA plans.
In March, the Iowa Senate approved legislation which, if it is passed by the Iowa House of Representatives, would expand AHP availability in that state. Other states may follow Iowa’s example.
Iowa’s exchange may be particularly at risk of being destabilized because two of its three insurers announced they will be exiting it this year, leaving one company as the only issuer of coverage left in the Iowa exchange. That company has suggested that it may bring a lawsuit against the state of Iowa if the AHP legislation is enacted.