Here's How Trump's Association Plans Might REALLY Work

Mike Sturm, a consulting actuary at Milliman, went to Capitol Hill on Tuesday to try to help senators understand the Trump administration's new multi-state association health plan (AHP) proposal.

Sturm appeared at a Senate Committee on Health, Education, Labor and Pensions (HELP) subcommittee hearing on the proposal, which could let small employers team up to buy coverage through existing groups, or through new groups formed solely to buy health coverage.

The other witnesses at the hearing are strong supporters, or firm opponents, of the AHP concept.

Sturm said he simply wants policymakers and others to understand their options, not to take a position on the proposal.

"I'm in the middle here," he said. "Probably in more ways than one."

Sturm's remarks could shape what key senators think about the AHP proposal, and whether and how it ends up shaping the kinds of small-group plans that agents and brokers might encounter in the real world.

Proposed AHP Regulations

Many employer groups, and some benefits brokers, have been working on AHP proposals for years.

Supporters of the proposals hope that AHP will increase small employers' bargaining power.

Many supporters also hope that small employers will enjoy the same freedom from state and federal small-group coverage rules that large and midsize employers with self-funded health plans now enjoy.

The House has passed many AHP bills over the years. In the past, those bills have died in the Senate.

President Donald Trump tried to help AHP supporters in October, by including an AHP proposal in a health benefits executive order. Trump asked the U.S. Department of Labor (DOL) to boost AHPs by making it easier for an AHP to qualify as an "employer" for federal health benefits regulation purposes.

Earlier this month, the Employee Benefits Security Administration (EBSA), the DOL's benefits arm, posted draft AHP regulations. The draft regulations could let an AHP represent small employers from more than one state.

The Hearing

Sturm told senators and others at the hearing that any regulatory actions could have disadvantages as well as advantages, and unintended, unexpected consequences.

"Different rating rules create the possibility of risk pool segregregation between more expensive and less expensive members in a given market," Sturm said.

Sturm gave the following description of how believes the DOL AHPs might be different from current fully insured, non-grandfathered small-group plans, which must comply with Affordable Care Act small-group benefits and pricing rules.

They might be able to increase the difference between the prices charged for the youngest and oldest adult enrollees.
They might be able to define the geographic areas they serve differently than ACA-compliant small-group plans do.
They might be able to charge male and and female enrollees different rates.
They might be able to negotiate for rates based on their own member employers' claims, rather than taking rates based on small-group experience for the whole local market.
They might be able to leave out some of the benefits required by the ACA essential health benefits package, and, unlike ACA-complaint small-group plans, they might be able to offer plans that cover less than 60% of the actuarial value of the essential benefits package.