The new rules could make it easier for small businesses to band together and create health insurance plans that would be exempt from many of the consumer protections mandated by the Affordable Care Act.
The move permits “association health plans”. 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.
The New York Times reports that consumer groups, state officials and Blue Cross and Blue Shield plans have strenuously opposed similar ideas for years. Association health plans, they say, will tend to attract employers with younger, healthier workers, leaving behind sicker people in more comprehensive, more expensive plans that fully comply with the Affordable Care Act. That could drive up premiums, which already have risen steadily as Republicans have taken aim at President Barack Obama’s signature domestic achievement.
Chris Hansen, the president of the American Cancer Society Cancer Action Network said:
Those with serious health conditions like cancer would be left paying ever-increasing premiums for comprehensive coverage. The rule proposed today will almost certainly result in more people facing financial distress when an unexpected health crisis happens.
Read a thorough examination of the issue by Robert Pear in The New York Times
Read the Consumer Alert on AHPs from the National Association of Insurance Commissioners
From the American Academy of Actuaries comes this blunt description:
AHPs could result in unintended consequences such as market segmentation that could threaten non-AHP viability and make it more difficult for high-cost individuals and groups to obtain coverage, AHP insolvencies if they are not subject to clear regulatory authority and solvency requirements, and lack of consumer protections if AHPs are not subject to state-level protections.
Read the Issue Brief prepared by the American Academy of Actuaries