The Trump administration’s push to allow more people to band together to buy low-cost health plans would leave Obamacare’s insurance exchanges with higher premiums and 3 million fewer people enrolled, a new analysis found.
The analysis released Wednesday by the consulting firm Avalere Health looked at a proposed rule to expand access to association health plans, which are insurance plans typically bought by smaller employers and individuals banding together. A trade or professional association typically sponsors an association health plan. The plans do not have to meet stringent quality requirements of Obamacare’s insurance plans and therefore would be a cheaper alternative.
Avalere said the proposed rule would lead to 3.2 million people leaving Obamacare’s marketplaces by 2022. The law’s marketplaces are on the individual market, which is used by people who do not have insurance through a job or the government.
“Consumers are always looking for a new low-cost health insurance option,” said Dan Mendelson, president of Avalere. The downside is that the “migration of healthy people to a new product will ultimately take a toll on what is presently being sold in the market.”
The shift to association health plans also would lead to higher premiums in the law’s marketplaces. Avalere projects that premiums would increase by 3.5 percent from current average prices on the individual market. Average prices for the small group market used by small businesses would rise by 0.5 percent.
An additional 130,000 individuals would become uninsured by 2022 compared to under current law, Avalere added.
“The increased number of uninsured is largely caused by premium increases in the individual market as healthier enrollees shift into AHPs,” Avalere said.
Premiums for association health plans are expected to cost much less than Obamacare’s marketplaces. For instance, a premium for a new association health plan is projected to be $9,700 a year less than a plan on the individual market, Avalere said.
The reason association health plans can be so cheap is that they do not have to abide by stringent quality requirements to be sold on Obamacare’s marketplaces. Obamacare plans must cover certain benefits such as mental health and maternity care, and the plans cannot charge sicker people higher premiums.
The proposed rule is the latest attempt by the Trump administration to expand access to cheaper but skimpier health plans. The administration recently released a proposed rule to expand the duration of short-term health plans from 90 days to nearly 12 months.
The short-term plans also can avoid Obamacare’s quality regulations and be sold at a cheaper price, but experts cautioned it would lead to lower enrollment and higher premium’s on the individual market.
