A group trying to boost a form of non-Obamacare health insurance for the self-employed is fighting a decision from the Trump Department of Labor that blocked the sale of the product as an abuse of regulatory loopholes.
The plans the group is fighting for aren’t widespread — only about 50,000 people use them — but they offer an alternative to Obamacare coverage for people who find it to be too expensive. A nonprofit organization, ERISA Access for the Self-Employed Alliance, or “EASE Alliance,” launched Friday to get the word out about the alternatives.
“This is something that I feel very strongly about,” Tracey Schmitt Lintott, EASE Alliance executive director, said in an interview. “Being self-employed is difficult enough without having to deal with sky-high insurance premiums.”
The plans in question are, in some ways, similar to the “association health plans” the Trump administration has authorized but that have been blocked in court, which would allow small businesses and individuals to band together to buy health insurance that is less expensive and less comprehensive than Obamacare plans.
The plans backed by the EASE Alliance instead group together people seeking insurance by involving them all in a business enterprise, one based on their internet use. They allow people to join a “limited partnership,” LP Management Services, in which participants download software that collects 500 hours of data about their cell phone and computer browsing history. The partnership then sells the anonymized data, and the people who joined, considered “owners” in the company, can get a cut of those profits. The arrangement is meant to allow the partnership to offer “group” insurance, which can only be sold under a specific set of rules.
But the plans may not be able to operate for long. Last month, the Department of Labor determined they were illegal under ERISA, a federal law that sets rules about how employers are supposed to offer health insurance coverage. The agency concluded that the partnership plans couldn’t operate because the company didn’t show that the limited partners were “meaningfully employed by the partnership or perform any services on its behalf.”
In other words, jointly owning something doesn’t make someone an employee of an organization, explained Gary Claxton, director of the Kaiser Family Foundation’s Program on the Health Care Marketplace.
“They are trying to create some reason why they can be considered a group, but they are not,” Claxton said. “It has none of the attributes of group insurance.”
In response, Data Marketing Partnership, which provides the tracking software people get when they join LP Management Services, sued the Department of Labor. EASE Alliance said its primary purpose was to support the lawsuit, and it believes the plans do comply with ERISA and have benefited those who are covered. The group wouldn’t disclose how it was funded, saying only that it was formed by “parties that are concerned that millions of Americans don’t have access to affordable healthcare.”
“These plans are ERISA-compliant, and if you are one of the millions of Americans who can’t afford Obamacare premiums and don’t qualify for subsidies, you are basically out of luck when it comes to protecting your family. … There absolutely needs to be a solution, and we believe that these plans are a really good solution,” said Schmitt Lintott, who is also a former spokeswoman for the Republican National Committee and a former pharmaceutical executive.
The plans are a way for people who make a certain amount of money while self-employed, from Uber drivers to real estate agents and small-business owners, to get around a harsh reality: Because they have to pay for health insurance on their own, coverage is far more expensive to them than it would be to someone working at a large company where employers kick in to help pay for coverage.
Through the partnership plans, people can buy basic coverage or major medical. Costs vary depending on what people choose, so they’re priced anywhere between 20%-75% compared to Obamacare plans.
The partnership is aimed at people who don’t get help paying for premiums under Obamacare. By law, only people who make less than roughly 400% of the federal poverty level, or $51,040 a year for an individual, qualify for help. That means anyone making above that amount has to pay full price for coverage. There are many considerations that go into what people pay for Obamacare premiums, including age and smoking status, but on average, mid-level plans in most states cost $374 a month for an individual. Some customers have complained that their premiums cost more than their mortgage, and people have left Obamacare to join the ranks of the uninsured or to enroll in plans that won’t offer the same protections.
One of the reasons Obamacare plans can be expensive is that they require coverage for a range of medical services, from maternity care to mental health and prescription drugs. Plans trying to skirt Obamacare, such as those the partnership offers, leave out different benefits or can decide not to cover care associated with certain medical conditions. Critics of alternative insurance worry about this arrangement, given that people often cannot predict when they’ll face a serious medical condition.
“Most of these alternative arrangements have to go back to medically excluding people who are sick,” said Claxton from the Kaiser Family Foundation. “It’s really easy to make insurance cheaper if you only cover people who aren’t sick and if you penalize them if they get sick.”
Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University, which has been supportive of Obamacare, reviewed the arrangements and said she worried “about what people might be giving up in data privacy, not to mention the consumer protections in the Affordable Care Act,” which is the formal name for Obamacare.
Marc Machiz, a former Department of Labor official, said he would be concerned about whether this plan or others who decide to take on a similar model would be financially sustainable. If plans become insolvent, then people’s medical bills would go unpaid.
“It couldn’t be a worse idea,” he said. “In all my years of experience, if I sat down to design a nightmare, it would be this structure.”
Schmitt Lintott pushed back on concerns about privacy issues, saying the plans were in “sharp contrast to big tech, which takes that data from Americans every day without their consent and sells it for large profits.” The alliance stressed that the data is anonymous and that workers have control over what information gets shared, including the ability to delete and turn off the collection when they want to. The group also said it only supports plans that protect against discrimination, are financially stable, and provide access to affordable healthcare.
As the lawsuit moves ahead, Obamacare’s future is being weighed in court, and Congress continues to face gridlock on the law. A bipartisan bill that would have injected more funding into Obamacare collapsed in 2018 because of a disagreement on abortion. Another bill from House Speaker Nancy Pelosi would inject billions of dollars into the law so more people would qualify for subsidies, making premiums cheaper to beneficiaries but increasing federal spending. That approach has the backing of the healthcare industry and wouldn’t help control overall healthcare spending or set prices.
