As the Donald Trump administration begins to roll out its new rules to allow cheaper less regulated health plans into the individual and group insurance market, there’s yet to be much interest from health insurance carriers to offer such policies or help administer them for small employers.
It’s still early, but this month could be key to the Trump effort to offer less regulated health plans as major carriers report earnings. UnitedHealth Group, Aetna, Humana and Anthem in particular are the health plans to watch, given they exited or scaled back from offering individual coverage known as Obamacare on public exchanges under the Affordable Care Act.
Trump’s executive order designed to spur competition in the individual insurance market is closer to being implemented. Among other things, the Trump administration is easing rules to allow small businesses and other groups to band together to create “association health plans.”
Last week, the U.S. Department of Labor announced its proposal to “expand access to healthcare through small business health plans.”
“The proposed rule, which applies only to employer-sponsored health insurance, would allow employers to join together as a single group to purchase insurance in the large group market,” the labor department said in announcing the new plans, also known as “Association Health Plans.”
“These improvements stand to open health insurance coverage for millions of Americans and their families by making it more affordable for thousands of small businesses and sole proprietors,” the labor department said. “By joining together, employers may reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure, and offer a wider array of insurance options.”
“Although it’s a little premature to speculate given there’s merely a proposed rule and more details will be sorted out as the regulatory process moves forward, we believe insurers are more likely to help administer AHPs established by bona fide trade associations, such as NRF or state retail associations,” National Retail Federation vice president of health care policy Neil Trautwein said. “Associations have a long track record, are financially stable and accountable to their members. All of these factors suggest insurers will view associations as attractive business partners and help make these plans available to small employers.”
It could be a sizable market. The labor department said “up to 11 million Americans working for small businesses/sole proprietors and their families lack employer-sponsored insurance.”
But there’s been little interest from major insurance carriers in selling such group plans to smaller employer buyers, let alone helping them administer them as they do worker coverage for large self-insured employers. The major insurance lobbies have actually been concerned and continued to criticize Trump administration rules last week after the labor department came out with its “notice of proposed rulemaking” on Friday. It is available for public comment for 60 days.
“Americans deserve affordable choices, and we are concerned that the changes proposed would lead to higher prices and weaker consumer protections in the small group and individual markets, where nearly 40 million Americans get their coverage,” America’s Health Insurance Plans, which represents large carriers including Anthem, Centene, Oscar Health, Humana and many Blue Cross and Blue Shield plans said Friday.
Eventually, Trump also wants “short-term, limited duration health plans” that may be cheaper but will cover less and attract healthy, younger purchasers away from individual health plans with richer benefits. By siphoning off healthier Americans to cheap plans Trump wants, those sold on public exchanges under the Affordable Care Act could become more expensive if a higher concentration of older and sick patients are enrolled.
Consumer groups have described the Trump administration’s proposals as a way to create “junk” policies.
“Under the rule by the Trump administration, junk health plans would compete against insurance that provides comprehensive benefits and abides by other safeguards protecting people who need and buy health care,” Families USA senior director of health policy Eliot Fishman said. “This will endanger both those who are sold cheap, junk plans and the older adults and people with pre-existing conditions who get left behind. Couched in terms of serving small employers, the proposed rule’s extraordinarily broad definition of employers will let substandard plans flourish in a way that is clearly calculated to gut the ACA’s core insurance safeguards that are critically important to people with pre-existing conditions, like asthma, diabetes or even cancer.”
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