Association health plans offer new coverage option for small businesses

    Small businesses struggling to afford health insurance under the Affordable Care Act may find relief in the Trump administration’s recent expansion of association health plans—or AHPs—which will be phased in starting Sept. 1.   

    Katie Mahoney, vice president of health policy for the U.S. Chamber of Commerce, spoke at a LABI event in Baton Rouge this morning about the expansion of AHPs and what it might mean for small business owners.

    The new rules, issued by the Labor Department in June, make it easier for business owners to band together as associations to purchase single group health plans. Federal officials say the expansion of AHPs will help level the playing field for small businesses, giving them more options and collective power to negotiate with providers, like large companies can.

    “AHPs can offer great benefits to small businesses and micro companies,” Mahoney said. “These plans provide good coverage, consumer protections and are permitted under the ACA framework.”

    Despite the heated political rhetoric surrounding the national health care debate, Mahoney says the new policy does not do away with the ACA or the federal consumer protections it put in place, as some claim.

    “I’m troubled by both sides of the aisle asserting this is either the greatest thing since sliced bread and will destroy the ACA or, on the other hand, it’s the worst thing since sliced bread and will destroy the ACA,” she said.

    Critics also say association plans may not provide full coverage that workers need and could drive up costs in the small-group and individual markets. Also, there are concerns about the controversial history of AHPs. Mahoney acknowledges there have been problems in the past, where some plans offered by associations were not priced properly and became insolvent, leaving people without coverage.

    The new rules have added safeguards to avoid those issues and associations being created solely to offer AHPs. The language says associations must have another reason for existing, and member companies must operate in a common geographic area or in the same industry.

    In July, a lawsuit was filed by 12 state attorneys general against the Trump administration’s new rules, asserting the move is an attempt to dismantle Obamacare and consumer protections.

    Mahoney calls the recent challenge a “politically motivated lawsuit” and says the new AHP policy was drafted to withstand litigation, which she hopes it does. “It’s a very well-written policy.”

    LABI President and CEO Stephen Waguespack said after the event that his association, which represents more than 2,000 Louisiana employers, has yet to decide on whether to pursue an AHP.

    “We’re still trying to get an understanding of the new rules,” Waguespack says. “We’re talking to our market partners, and we sent a survey to members. We want to make sure our members, especially the small guys, have as much choice as possible.”

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