On Thursday, January 4, the Department of Labor released a proposed rule that would change rules regulating what are known as association health plans (AHPs). This is the result of an executive order issued by President Trump in October 2017, directing the agency to reexamine rules in an attempt to make AHPs more “attractive” to consumers. The release immediately drew attention from both sides of the Affordable Care Act debate: supporters claim that this will be yet another death knell for the ACA, while ACA supporters worry that expanded AHPs will further weaken the Marketplace enrollment risk pool by attracting younger, healthier customers.

So: are they right?

Association Health Plans have existed for decades. According to America’s Health Insurance Plans (AHIP), AHPs are generally organized around a comment area of interest, such as a farm bureau or chamber of commerce. AHPs themselves are not insurance plans; instead they enable the association to purchase insurance on behalf of the group, or to self-insure for member medical claims. Essentially, AHPs allow an association to function as an employer for the purposes of offering insurance to members. Prior to 2010, AHPs were subject to different rules and regulations depending on how they were formed and whether they only served members in a single state, or in multiple states.

One key point to keep in mind is that AHPs are not new. In the past, many have struggled with fraud and insolvency. The ACA attempted to make the plans more secure by requiring them to meet the same requirements that other group health plans are required to meet. In order to form an AHP, groups were required to meet certain requirements, such as existing for reasons other than sponsoring insurance, or requiring members to have a common interest and operate in a common geographic area. Under the proposal, these requirements would be relaxed, with the intended result being an increase in available AHPs.

ACA detractors see AHPs as a way to avoid ACA coverage requirements – and potentially destabilize the Marketplace risk pool – by offering an avenue to sell less-generous plans, which would likely be less expensive. This same concern is echoed by ACA supporters, who see the new proposed rules as threats to the future of the ACA in general.

But it is questionable whether the changes will have the impact that either group desires. The Department of Labor avoids estimating how many Americans would even be interested in these new, less-regulated health plans in the rule’s Regulatory Impact Analysis, instead just repeating statistics of how many people currently purchase plans through the individual or small group market today, or remain uninsured, and stating that those were all potential AHP customers.

Given AHP struggles in the past, and the fact that many Americans like and want the protections offered by the ACA that the new rules could do away with, it is unlikely how many people would even be interested in joining. It is more likely that any changes will impact a small portion of the population, and the hopes (of ACA detractors) and fears (of ACA supporters) are unfounded.

Comments on the proposal are due March 6, 2018.

If you have questions about the proposal, or would like assistance in drafting comments, please contact Melissa Andel, director of health policy, at 202-558-5272 or melissa@appliedpolicy.com.