Industry associations may soon be able to offer members lower-cost health insurance — at least in some states.
Earlier this year, President Donald Trump enacted a law allowing groups of small businesses and independent contractors to buy health coverage through Association Health Plans (AHPs), which some say offer a cheaper alternative to the Affordable Care Act.
The U.S. Department of Labor oversees the program and in June released final regulations, which are currently being mulled by national trade associations and insurance carriers.
But there’s been a hitch. In July, a dozen states filed lawsuits against the DOL, alleging that AHPs undermine the Affordable Care Act. Attorneys General argue that the program offers fewer consumer protections and that it would enable small employers to skirt health benefits required under the ACA, such as emergency services, prescription medication and rehabilitation services.
They also claim that AHPs would negatively impact state revenue derived from taxes and administrative fees from current ACA group plans.
“These junk plans offer substandard health coverage and threaten our local insurance market. With this lawsuit, we’re taking action to protect our residents’ access to decent, affordable coverage,” Washington, D.C. Attorney General Karl Racine stated in a press release.
Among those states suing is California. That’s why IPSSA put a temporary hold on rolling out a group health insurance program. “We were getting really interested,” said Ray Arouesty, senior vice president of Arrow Insurance, part of HUB International Insurance Brokers, IPSSA’s insurance provider.
However, he acknowledges that any excitement generated by President Trump’s announcement of low-cost health coverage for association members may have been overly optimistic. Arouesty says he hasn’t yet seen anything to suggest that AHPs would have been significantly more affordable than current marketplace offerings.
“All of my association clients were excited, perhaps prematurely, because they want low rates and great coverage,” Arouesty said.
For its part, APSP is aware of the lawsuits but is continuing to explore the possibility of a group health insurance plan.
“There are a lot of details that need to be worked out on many levels with the states, insurance carriers and brokers, but we are hopeful that in the future APSP can offer a program ... that will provide the members with affordable health care,” said Seth Ewing, director of membership and business development.
Among other states suing: Virginia, Kentucky, New Jersey, Washington, Oregon, Delaware, Maryland, Pennsylvania and the District of Columbia.
