Thanks to the efforts of the Trump administration and Sen. Rand Paul, R-Ky., millions of people will soon have access to more affordable health insurance.
On Tuesday, the Department of Labor finalized a new rule expanding under federal law access to association health plans, which will provide small business owners and their employees, as well as sole proprietors, with the ability to gather together to purchase group health insurance plans.
Group health insurance plans provide significant advantages for consumers for several reasons. First, the larger the group purchasing insurance, the more negotiating power it has with insurance companies, allowing consumers to buy plans at significantly lower rates than they otherwise would be able to in the individual marketplace. Second, group health insurance plans do not have to comply with many federal health insurance regulations that drive up the cost of insurance. Third, because group plans often include hundreds or even thousands of people, costs are spread out more easily among those in the group. Fourth, group health insurance plans can be purchased across state lines, allowing the purchaser many more options when shopping for the best plan.
Under federal law, large employers are already able to buy group health insurance plans across state lines, but many smaller employers, their employees, and sole proprietors, as well as their family members, have been prevented from buying these plans. This means millions of people have been forced to buy health insurance at a much higher rate than those fortunate enough to work for a large corporation.
The Trump administration’s rule change, which had long been promoted by Paul, redefines who qualifies to purchase group health insurance plans across state lines. Under the new rule, employer groups and associations with a “commonality of interest” will be able to buy “association health plans” in a manner similar to their large corporate competitors.
According to the rule, “employer groups or associations [will] meet the commonality of interest criteria if their members [are] in the same trade, industry, line of business, or profession, or maintained their principal places of business in a region that does not exceed the boundaries of the same State, or in the same metropolitan area (even if the metropolitan area includes more than one State).”
The Department of Labor notes on its website the rule also “includes important safeguards,” including “anti-discrimination protections.” Further, “AHPs may not charge higher premiums or deny coverage to people because of pre-existing conditions, or cancel coverage because an employee becomes ill.”
The expansion of association health plans is a truly remarkable improvement for the health insurance industry, one many insurance companies fought against because it gives significantly more power to millions of consumers across the country. There are currently about 8 million Americans who work for small businesses that do not have access to group health insurance, as well as three million sole proprietors.
In a press release following the announcement of the finalized rule, Paul called the change “one of the most significant free market health care reforms in a generation.” He’s right. With one simple rule change, the Trump administration substantially expanded the group health insurance market, allowing market forces to drive down costs instead of trying to enact burdensome government mandates and price controls.
While expanding association health plans may seem like a relatively small feat, its impact could be far-reaching and immense. The Congressional Budget Office estimates that by 2023, about 4 million people will enroll in an association health plan. When combined with a proposed rule change that would expand short-term health insurance plans, which has also been backed by Trump and Paul, CBO predicts the two rule changes would reduce the projected federal deficit by $1 billion over the 2019–2028 period, and that the projected number of uninsured Americans will drop “by roughly 1 million in 2023 and each year thereafter.”
Congress has repeatedly failed to fix the growing health insurance crisis by repealing and replacing the Affordable Care Act. But thanks to the efforts of reform leaders like President Trump, Sen. Paul, Labor Secretary Alexander Acosta, and free-market state legislators across the United States, notable progress has been and will continue to be made on the healthcare front.
Justin Haskins (@JustinTHaskins) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is an executive editor at The Heartland Institute.
