Small businesses and individual workers will be allowed to band together to provide medical coverage that will be less expensive than Obamacare plans. But critics say the move will provide inadequate protection for consumers.
The Department of Labor has released its final rule Tuesday as part of the Trump administration’s broader actions to give people options outside of Obamacare. Labor Secretary Alexander Acosta framed the provision as a way to “level the playing field” between small businesses and larger companies, which he says have more bargaining power and the ability to spread risk among their employees.
Certain plans can be available in September, ahead of the open enrollment period that would be starting under Obamacare in November.
“Small businesses, including the self-employed, will be able to obtain healthcare coverage as if they were a large employer,” Acosta said in a call with reporters Tuesday morning.
Supporters say the proposal would allow people and businesses to join associations even if they are working in different states.
The National Federation of Independent Businesses, the National Restaurant Association and the National Retail Federation all support the rule.
Seema Verma, administrator for the Centers for Medicare and Medicaid Services, praised the rule in a statement and highlighted customers in Obamacare who do not get subsidies and have to shoulder higher costs.
“The Trump Administration took important steps today to help small business employees and their families, who were left out of Obamacare, gain access to higher quality, more affordable health coverage,” she said. “The number of small businesses that offer health coverage has been declining for years and Obamacare did nothing to reverse this trend.”
Those opposed to the provision say healthier people would opt for the association health plans and leave the Obamacare-created exchanges, which allow certain consumers to access private health insurance that is subsidized by the government. Customers who are left in the exchanges and whose income doesn’t qualify them for subsidies would have to pay more because sicker people would be left behind. Six million people are expected to enroll in these plans, according to the Congressional Budget Office.
CBO projected that these plans, and short term-plans that are another type of alternative health insurance that will be offered by the Trump administration, will increase premiums on the exchanges by 2 to 3 percent.
Critics also worry that the plans would exclude certain types of medical coverage, such as mental health or maternity care.
Senate Minority Leader Chuck Schumer called the latest rule a “sabotage of our healthcare system” and a “back door to expanding junk insurance plans that weaken protections for people with pre-existing conditions.” He pointed out that various medical groups representing doctors and hospitals had opposed the proposal when it was introduced.
Washington Sen. Patty Murray, the top Democrat on the Health, Education, Labor and Pensions Committee, said the rule would “make healthcare in our country worse by undermining access to care for people with pre-existing conditions, destabilizing markets and driving up costs.”
States can ban association health plans, a move that a handful of left-leaning states have considered.
The Trump administration says people should have multiple options for coverage that provides them a way out of the Obamacare mandates that cause price increases. The plans, they say, will be similar to the type of medical coverage that people receive in a large business.
“They will be protected from pre-existing conditions just as they are in the large-group market, as well as on age and gender,” said a senior official from the Labor Department.
America’s Health Insurance Plans, which represents insurers, said that the final rule “provides some important protections by ensuring consumers, including those with pre-existing conditions, do not face discrimination as new association plans are created, and by preserving state authority” to regulate the plans.
The organization, however, said that it was concerned about the impact that the plans would have on the Obamacare markets.
“Ultimately, the rule could result in fewer insured Americans and may put consumers at greater risk of fraudulent actors entering this market,” AHIP said.
