When the Trump administration rolled out a plan to provide a less expensive alternative to Obamacare by allowing workers and small businesses to pool together to buy insurance, Democrats charged that it was opening the door to worthless “junk” and “skinny” plans. The early evidence suggests that, on the contrary, the initiative is working out — at least for now.
The administration’s alternatives, known as “association health plans,” have been covering the same benefits that Obamacare plans do, even though they are not obligated to, according to a new analysis by the industry publication Modern Healthcare and another by AssociationHealthPlans.com.
Just like Obamacare plans, they are paying for prevention, visits to the doctor’s office and the hospital, emergency medicine, prescription drugs, maternity care, and mental healthcare.
The plans are also covering people with pre-existing conditions, such as cancer or diabetes. In fact, they’re required to, an aspect of their coverage that was not well publicized, according to Kev Coleman, president of AssociationHealthPlans.com. “That’s something that was lost in the mix,” he said.
Officials in the Department of Labor announced new rules for the plans in June, with some of the plans allowed for purchase beginning in September. Since then, at least 28 plans have launched in 13 states, according to Coleman’s analysis.
Chambers of commerce, trade associations, and people who are self-employed have been enrolling. One of the plans is offered by the Nebraska Farm Bureau Federation, which counts more than 59,000 farmers and ranchers among its members.
One Trump administration promise for the plans that has yet to materialize is that they will permit the sale of insurance “across state lines.” So far, only one of the plans is selling in multiple states, the farm cooperative Land O’Lakes, available in Nebraska and Minnesota. The business has said its premiums could be a third lower than those sold on the Obamacare exchange. The American Veterinary Medical Association and other groups are aiming to set up plans across state lines in the months ahead.
Despite favorable early going, critics warn that it is only a matter of time before some unwanted pre-Obamacare practices creep back. The plans are allowed to charge people more based on age, health status, and gender.
Sabrina Corlette and Kevin Lucia at the Center on Health Insurance Reforms at Georgetown University have warned that the plans offer low “teaser” rates when they first roll out but then, when it is time for people to renew their coverage, might hike prices based on how sick an enrollee is and could charge older adults more.
“Because these plans lack consumer protections, plans that do cover essential health benefits could reduce coverage at some point, leaving consumers in the dark,” the pro-Obamacare advocacy group Protect Our Care said in a statement. “Fundamentally, association health plans open the door to coverage that is not comprehensive and have a long, well-documented history of fraud and abuse.”
The Obama administration initially moved to limit association health plans because they suffered insolvency problems. In the years before Obamacare, hundreds of thousands of people were left holding the bag for millions of dollars in unpaid medical bills when similar plans failed.
Following the Trump administration’s rules, most of the plans are being run by outside health insurers, such as UnitedHealthcare and Blue Cross Blue Shield, reducing the likelihood that they’ll become insolvent.
That, too, may change over time. Outside health insurers have been allowed to run the plans since September 2018, and associations were only allowed to begin running their own plans beginning in January 2019. New associations that form cannot get started selling plans until April. The self-run plans take longer to put together and implement than those by private health insurers. The groups running them have to decide whether to do their own marketing and review their own claims or to outsource the work.
Health insurance analysts are equally concerned about people outside of association health plans. They expect them to face higher premiums, which will make it harder for them to get coverage.
The consulting firm Avalere Health, for instance, has warned that the siphoning off of customers from the Obamacare exchanges will lead to premium increases for people left behind of about 3.5 percent, causing 130,000 more people to become uninsured over the course of five years. Avalere Health has estimated that 3.2 million people eventually will enroll in the plans, some of whom were getting Obamacare before, others of whom were uninsured.
A more recent study by the Congressional Budget Office projected that 5 million would be enrolled in the plans each year, 1 million of whom would otherwise have been uninsured. The analysis did not assess how many people on Obamacare would become uninsured.
There are signs that Trump’s actions have affected insurance rates. According to Gallup polling, the number of uninsured rose during former President Barack Obama’s last year in office and continued to rise under Trump. An estimated 7 million people who were formerly covered by health insurance in 2016 were going without by 2018.
