AHPs may offer small business respite from burdens of ObamaCare

[jserraglio]

WSJ Editorial Board 19.6.2018 — One perverse effect of the Affordable Care Act is that corporate America escaped some of the onerous mandates that hurt small enterprises. The Trump Administration is now trying to mitigate that inequity with a rule on association health plans, or AHPs, and perhaps the result will be a durable and popular alternative to ObamaCare coverage.

On Tuesday the Labor Department rolled out a final rule on AHPs. The point is to allow more small businesses to join forces to offer health insurance, using economies of scale to reduce costs and diversify risk. This is how corporations and unions manage health insurance in the large group market, either by paying an outside issuer or self-insuring.

Some groups can form AHPs now, but on a very limited basis. The new rule would allow industry groups across the country and local chambers of commerce to set up plans, which heretofore hasn’t been allowed under Labor's interpretation of the Employee Retirement Income Security Act (Erisa). Free-lancers such as Lyft drivers could now also band together.

The left says association plans are junk insurance that will blow up ObamaCare. But association plans are subject to ObamaCare rules such as pre-existing condition coverage and bans on lifetime limits. The plans also must abide by state regulations and benefit mandates, which as a practical matter could limit growth of the plans.

The headlines note that AHPs are exempt from the federal mandate on essential health benefits, with the false implication that this means no one will cover maternity care. But the main savings from association plans come from lower administrative costs and larger risk pools, not skimpy benefits.

Chris Condeluci, a lawyer who worked on the Affordable Care Act in the Senate, has explained that the law exempts the large group market from the benefits mandate because corporate coverage tends to be at least as comprehensive as the mandate and high in actuarial value. He is also right that employers team up in an AHP to “attract and retain talent” and compete with larger firms, which requires that plans be generous.
The real panic on the left is that many Americans may leave the ObamaCare exchanges for plans they prefer in price, quality or both. In other words, people might get better coverage.

Still, there are disappointments in the new rule, especially a provision that purports to be about nondiscrimination. The debate has been whether association plans could price premiums for an employer based on past health claims, which is a common tool that reflects risks and costs. This deals with groups of employees, not denying coverage because someone has cancer.

The draft Labor rule said an employer could price plans based on job function or other categories, but not health claims. Some existing AHPs sent rockets saying that could put them out of business. Labor’s final rule allows AHPs to continue to form under the traditional narrow path, protecting current plans.

But new associations formed under the expanded route will not be able to price based on past health data. The rule seems to wink that other factors can be a proxy for that information. The Administration wants to insulate the rule from court challenges, which are coming regardless of the details. But the concern on the policy merits is that this pricing limitation could reduce the incentive to join.

On the plus side, the rule includes language to ensure that association plans don’t implicate ”joint-employer” liability, which will protect businesses from such litigation. The International Franchise Association applauded the rule on Tuesday, and franchises are a natural constituency for association plans.

The Congressional Budget Office says new AHPs will attract four million Americans, about 400,000 of whom are uninsured, and that means more affordable and better coverage for people who might not otherwise have it. For once the test of a health-care policy will depend less on government dictates than on the choices of millions of Americans.

[jbuck919]

Here we go again. Anyone who believes that there is any humanistic alternative to Obamacare but single payer needs to have his head examined. The problem with many Americans is that they think only an American ever had a good idea. Come off it, j., you know this as well as I do. Unless you are channeling the spirit of our former moderator Corlyss, spare us these risible posts.

[jserraglio]

Here we go again. Anyone who believes that there is any humanistic alternative to Obamacare but single payer needs to have his head examined. The problem with many Americans is that they think only an American ever had a good idea. Come off it, j., you know this as well as I do. Unless you are channeling the spirit of our former moderator Corlyss, spare us these risible posts.

About having one's head examined, my head tells me 'no'.

About my knowing something as well as you do, it's unfathomable.

About sparing us the laughable journalism of a 40-Pulitzer-Prize-winning publication, one might first try test-driving one's own faculties: Don't like it, don't read it.