The Trump administration on Tuesday finalized a controversial exception to Obamacare rules that will give more freedom to people who want less health insurance for less money.
Starting September 1, small businesses and individual business owners will more easily be able to form “association health plans.” Among other things, such plans are stripped of the requirements imposed by the ACA to cover fundamental benefits such as prescriptions, maternity care, emergency care or mental health care. In return for skimpier coverage, the customer pays less.
Plenty of Georgians will be interested, said Melissa Probst, an accountant in Sugar Hill who is herself a small businesswoman.
“Health insurance is one of the most expensive expenses on a small business,” Probst said, noting the increasingly crushing burden of out-of-pocket costs. Her clients are constantly asking whether they really have to have it and then whether they can get it cheaper, she said; “The ones that are pretty much living paycheck to paycheck are going to want to pick and choose.”
The new rule is hotly debated because in the process of attracting customers to less expensive plans, it is expected to further weaken the Affordable Care Act, helping push up premium prices next year for other people, who don’t buy the plans.
Association health plans have long existed, but they were tougher to qualify for. The idea was that an association already formed for some other reason — say, an association of realtors — would have the same rights as a big company. They could band together and negotiate with insurance companies to get health benefits for a better price.
Now, the association can form just for the purpose of getting health insurance, said Karen Pollitz, a senior fellow at the Kaiser Family Foundation. And that can drastically change the impact of the plans in a couple of different ways.
First, if people are joining an association just because they want cheaper health insurance, that likely means they’re younger and healthier. When healthier people leave the main market for association plans, the main market become sicker and more expensive to insure.
Both private and federal analysts expect millions of people to be drawn into the plans, perhaps 3 million or 4 million. Federal officials estimate that 400,000 people who are uninsured now would get the plans.
But others would drop more robust coverage to get them. The consulting firm Avalere estimated 3.2 million would shift over from standard health insurance.
In Georgia, insurance companies are expected to propose their 2019 rates within weeks. Laura Colbert at Georgians for a Healthy Future was already expecting an increase, but this and other initiatives from Washington will make it a bigger price hike.
Between Congress repealing the mandate that every individual have health insurance, and a rule under consideration that would strengthen short-term plans, and association health plans, standard ACA exchange health insurance will lose healthy customers.
All that considered, Colbert said, when premium prices are announced “we are thinking about a 20 percent increase.”
“It’s going to be tough for people who have health conditions they’re trying to manage,” Colbert said, “and especially tough for people who don’t get financial assistance but need comprehensive coverage.”
The federal Obamacare subsidies cut off at about middle class, for example those making perhaps just over $65,000 a year for a family of two. They pay full price for health insurance.
Last year’s increases were already historic. Companies on the individual health insurance market said that largely due to turmoil out of Washington on the ACA, they had to raise rates as much as 50 percent or more.
Spokesmen for Blue Cross Blue Shield of Georgia and industry groups were not immediately able to say what impact the new rule might have.
It will be crucial for people to make sure they understand what is covered in their association plan if they buy, Pollitz said.
When they were allowed before the Affordable Care Act, also known as Obamacare, the plans were magnets for scam artists, according to a report by Stateline, because they had so much leeway. One federal report found that over two years unauthorized plans in the U.S. failed to pay at least $252 million in claims. “Although every state was affected by at least 5 of these entities, these entities were most often identified in southern states,” said the report, by what is now known as the Government Accountability Office.
However, for the people who will be helped by the plans, the administration is full speed ahead by Washington standards: “For a rule to come out at the end of June and be effective on Sept. 1, the federal government at least is saying we don’t want to stand in the way of these new products being offered as soon as possible,” Polliltz added.
Probst, for one, currently covered by company insurance through her husband, wouldn’t rule it out.
“No; this is what I would do,” Probst said. “I would look at the association plans and see what they offer and do a cost comparison.” And for her clients who are more interested in affordable premiums than robust coverage, they’ll look forward to restoring better coverage another day.
Today, she said, “They actually need the cash to grow their business.”