The Trump administration’s Department of Labor offered a proposed rule on Thursday that will allow more small businesses and organizations — even sole proprietors — to band together to form association health plans (AHPs).
Echoing a call in an October executive order, the proposal would allow AHPs to sidestep Affordable Care Act (ACA) regulations, allowing them to offer insurance without the 10 essential health benefits required in the ACA. The plans could not explicitly discriminate based on health status, but analysts say this will not necessarily deter adverse selection.
The proposed rule would also allow small companies within a geographic area, even across state lines, to band together to form an AHP. An AHP would not be restricted to a “common interest,” such as operating in the same industry.
Millions of individuals and small employers bought insurance through associations before the ACA, but the Kaiser Family Foundation said only 6% of employers with fewer than 250 employees offered health insurance through AHPs in 2017.
The reason that AHPs fell out of favor was due to the ACA instituting consumer protections on them, including requiring that the groups be treated the same as individual and small-group market plans. Those regulations included requiring that plans cover people with pre-existing conditions and states could no longer exempt AHPs from rules and standards affecting other commercial insurers.
Though a small percentage of employers provide insurance through an AHP now, the plans remain popular among conservatives, who see them as a way to provide more affordable health insurance options.