A proposed rule by the U.S. Department of Labor that makes it easier for small businesses to join together to create health plans is eliciting mixed reactions from employers that are unsure of what this could mean for their health care costs.
The proposal issued in early January would make it easier for small-business owners, sole proprietors and other self-employed people to buy insurance as a group, giving them more purchasing power and lower premiums. These plans, called association health plans, would be exempt from consumer protections and other regulations of the Affordable Care Act, including the requirement to provide essential health care benefits.
“We’ve been talking to a number of different associations like retail and homebuilders, and in general they are positive about the potential this could have for their members in giving them access to affordable and improved health care options,” said Jeff Ray, who leads consultancy Mercer’s associations practice, which provides insurance products to professional associations. “They are also concerned about the potential impact on the state exchanges and about the logistics and risks of offering these kinds of plans. Frankly, some are hesitant and are expressing concerns in terms of political uncertainty.”
Under the ACA, association plans were treated as small businesses and were required to provide all of the law’s mandated benefits. The proposal allows small businesses to qualify as large group plans, which are subject to fewer federal and state requirements. It also allows employers to join together based on geography or industry rather than on a common professional interest, according to a DOL statement.
These looser definitions and regulations could mean a return to a history of fraud and abuse surrounding association health plans before the ACA was passed, according to Sarah Lueck, a senior health care policy analyst with the Center for Policy and Budget Priorities, a nonpartisan think tank in Washington, D.C.
“Letting a lot of these associations newly form under lower standards opens the door to fraud and abuse and insolvency,” she said. “In the past there were bad actors that were unable to pay claims and then they were gone. That’s why if this proposal goes forward state and federal regulators will have to be very careful.”