In a recent ruling by Presidential Executive Order, association health plans (AHPs) will now allow groups to offer health insurance coverage. Whether or not AHPs will be a good alternative is up for debate, but the goal is to provide small companies another option for health coverage. Signed on June 19, 2018, the new rule is being phased in, with uncertainty as to how soon plans will be offered.
Some industry groups that actively lobbied for AHPs are now hesitant to make such a plan available to their members because the new rule fails to include many of the benefits they wanted and there are risks to using association health plans.
About Association Health Plans (AHPs)
An association health plan is one that is available to groups who work in the same industry, profession or geographic area. They can be adapted to particular needs, such as those specific to a restaurant staff or retail workers, for instance. Costs can be spread evenly among members, so the larger the group, the less each member will be required to pay. Pre-existing conditions cannot exclude you from coverage.
Association Health Plans Pros
Proponents point to several characteristics of association health plans as advances, especially for small business.
Price flexibility – AHPs will be able to set premium prices based on risk characteristics, something not allowed with plans under the Affordable Care Act, or Obamacare. This will give younger, healthier people a lower-cost option. AHPs won’t be able to deny membership or charge different prices based on protected statuses such as race or religion.
Plan flexibility – Groups can develop plans to fit their needs and preferences. Some will offer better prescription coverage than others, for example. Others might provide better coverage for annual check-ups.
Easy to join – AHPs can offer access at any time, not just during a specific period every year.
Association Health Plans Cons
Critics of association health plans point to many of the same issues, but from a different perspective.
Inconsistent coverage – An association health plan in one group might provide excellent coverage while other groups can provide skimpier coverage.
Price flexibility – For the naysayers, pricing flexibility could translate into trouble for older and unhealthier members. As it was before the ACA, insurance companies will be allowed to charge more for riskier members. Good for younger, healthier groups, bad for those who need coverage the most. Various circumstances might affect affordability, with insurance companies being able to charge more depending on the industry, for example.
Age and health bias – Some contend that association health plans will ultimately draw healthier people away from ACA plans, which will be a better choice for sicker people. This could eventually undermine the entire Obamacare system. Also, small companies with younger, healthier employees might do well in terms of costs, but not offer the kind of comprehensive coverage their older employees typically need.
Association health plans have the potential to be a positive option, especially for small companies with younger employees. Unfortunately, according to some health policy consultants, if a company offers its employees a skimpy health plan, they would no longer be eligible for subsidized coverage through an exchange, prospectively bad for people who need more comprehensive coverage.
If you’re interested in getting health insurance on your own, go here to compare quotes from different carriers.