Lower costs, fewer benefits in new health insurance option
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WASHINGTON — The Trump administration Tuesday rolled out a health insurance option for small businesses and self-employed people that could lead to lower premiums but may also cover fewer benefits than current plans.
Labor Secretary Alex Acosta said the new “association health plans” will allow small business to pool their purchasing power, gaining access to some of the advantages that large employers have in the health insurance market.
“Today the Trump administration helps level the playing field between large companies and small businesses,” Acosta said. “This expansion will offer millions of Americans more affordable health care options.
The new plans would retain the same protections for people with pre-existing conditions, older workers, and women, that large company plans now have, Acosta added. Details were expected later Tuesday.
The plans could be marketed across state lines within a geographic region to businesses in a given industry — auto repair shops, for example. Or a local chamber of commerce could sponsor one in a given community. The plans could be sold to self-employed people, like musicians.
Allowing interstate marketing within a geographic region represents a shift from the original concept that the plans would be offered nationwide.
President Donald Trump has long asserted that promoting the sale of health insurance across state lines can bring down premiums without sacrificing quality. But many experts weren’t convinced, because medical costs vary greatly according to geography.
Ultimately, the idea’s success depends on buy-in from plan sponsors, consumers, insurers and state regulators. No major consequences are expected for people covered by large employers.
Acosta cited enrollment estimates that predict a modest impact: about 4 million people covered by the plans within a few years, including 400,000 who would have been uninsured. Compare that to the total number of about 160 million covered by job-based insurance.
After Republicans hit a dead end trying to repeal the Affordable Care Act, the Trump administration has pushed regulatory actions to loosen ACA requirements and try to lower premiums for individuals and small businesses, which now reflect the cost of comprehensive coverage.
Another major initiative is expected later this summer when the administration eases rules for short-term health plans lasting less than a full year that could be purchased by individuals. Those plans wouldn’t have to cover people with pre-existing conditions, but would offer healthy people much lower premiums.
Critics say the administration’s approach will draw healthy people away from the Obama health law’s insurance markets, raising the cost of coverage, which is subsidized by taxpayers. About 11 million people are covered by HealthCare.gov and state markets, but the administration’s priority is to try to lower premiums for another 7 million or so who buy their coverage directly and don’t get any help from the government.
“To the extent that these plans develop and serve as a parallel market, that could have a destabilizing effect,” said Karen Pollitz of the nonpartisan Kaiser Family Foundation, an expert on individual health insurance. Pollitz also served as a consumer protection regulator in the Obama administration.
“People who think they can get by without those (comprehensive) benefits will look for cheaper premiums,” she added.
State insurance regulators have been concerned about association health plans because similar plans in the past had problems with financial solvency and fraud. Administration officials said Tuesday that states and the federal government would share regulatory oversight of the plans, with states retaining their current authority.
The new plans will be phased in, starting in September.
A small business group called Job Creators Network welcomed the Trump administration move. Group president Alfredo Ortiz said it “will create more options, more competition, and lower costs for Main Street small businesses.”