Report: How Association Health Plans Impact Enrollment And Premiums
February 28, 2018
Loosening regulations on association health plans (AHPs) will lead to higher prices and weaker consumer protections for millions of Americans, according to a report by Avalere on behalf of America’s Health Insurance Plans (AHIP). The Department of Labor’s proposed rule on association health plans will likely push up premiums in the individual and small-group market, increase the number of uninsured, and result in higher out-of-pocket costs for enrollees with significant health care needs.
Specifically, the new Avalere report finds expanded AHPs would result in:
- Higher premiums in both the individual and small-group markets. Premiums would increase between 2.7 percent – 4.0 percent in the individual market and 0.1 percent -1.9 percent in the small-group markets, largely due to healthier enrollees shifting into AHPs.
- Increase in the number of uninsured Americans. The proposed rule could result in up to 140,000 individuals becoming uninsured in 2022—largely due to premium increases in the individual market as healthier enrollees shift to AHPs.
- An additional 2.4 million-4.3 million people enrolled in AHPs. Enrollment in AHPs is projected to come from currently insured individuals and small businesses.
- Lower premiums for those that enroll in AHPs. Premiums would be significantly lower for AHP enrollees—largely as a result of AHPs offering less generous benefits than currently offered in the marketplace coupled with “aggressive risk-selection out of the individual and small-group markets.”
- Higher out-of-pocket costs for enrollees with significant health care needs and the return of potentially discriminatory rating practices. AHPs would provide “less generous coverage than currently offered in the individual and small-group markets, while covering fewer benefits.” This could result in AHP enrollees facing significantly higher out-of-pocket costs—especially for patients with chronic and serious medical conditions. Moreover, Avalere notes that flexibility provided to AHPs to regulate their membership “could be used to discriminate against higher cost enrollees and groups” and could mark the “return of potentially discriminatory insurance practices” by association plans.
Additional proposed regulations could further destabilize insurance markets and push premiums even higher, Avalere found. For example, the Administration’s recently released proposed rule on short-term limited duration plans “could similarly incent healthier individuals to exit the individual market, further increasing premiums for those remaining in the ACA markets.”