A new health insurance option awaits consumers this fall. Proponents say it will offer lower premiums and relief from increasingly expensive Obamacare policies sold in the so-called individual market. That’s the place where people who don’t have employer or government-sponsored insurance turn when they need coverage.
It’s no secret rising premiums have hurt people in that market if they are among those whom the law considers too wealthy for subsidies to help them out — for example, families of four with incomes above $100,400 and single people whose incomes exceed $48,560.
So the Trump administration has approved the return of association policies, called AHPs for short. Fraternal or professional organizations can sponsor one. A single proprietor or sole owner of a business also can set up one of these new arrangements.
But these “new” arrangements are not new. They were around for years before the Affordable Care Act was passed, and they’ve been resurrected by the Trump administration to promote a low-cost option for a small slice of the insurance marketplace. Labor Secretary Alexander Acosta offers this rationale: “Many of our laws, particularly Obamacare, make health care more expensive for small businesses than large companies. AHPs are about more choice, more access and more coverage.”
Once again the individual market may become the Wild West of insurance as sellers pick and choose what benefits to offer. They can present a shopping nightmare for consumers who try to slog through the market and understand what they’re buying.
The Affordable Care Act outlawed the practice of considering a person’s preexisting health conditions before issuing a policy, one of the most important protections it provided. Under the government’s rules for AHPs, a person’s health still cannot be factored into the decision to issue a policy.
But insurers may find a way around this limitation, says Sabrina Corlette, a research professor at Georgetown University’s Center for Health Insurance Reforms.
“The way benefits are designed can make a policy very unattractive to certain groups of sick people,” she told me.
If an insurance group doesn’t want to cover a lot of people with HIV-AIDS, it could create a network that includes almost no doctors who treat people with that condition.
AHPs must still cover the ACA’s preventive services like mammograms and diabetes screening. But other ACA protections are gone.
Here’s where the shopping task gets tricky. AHPs won’t be required to cover any of the ACA’s package of essential benefits — things like mental health, maternity and prescription drugs. It’s also possible benefits could come with limitations on hospital stays and doctor visits.
There are other changes, too, that would-be shoppers should be aware of. The “flexibility” touted by the labor secretary means that AHPs will now be able to use gender in deciding how much to charge. Women could be forced to pay more than men because insurers say that, especially at younger ages, women have more claims.
On the Health Affairs blog, Katie Keith, of Keith Health Policy Solutions, showed what could happen when gender is factored into the pricing decision. Keith pointed to a Blue Cross Blue Shield comment letter that suggested AHPs could rate young men more than 40 percent lower than insurers could while young women could be rated more than 30 percent higher. The AHPs could rate engineers 9 percent lower than insurers and rate taxi drivers 15 percent higher. Engineers apparently file fewer claims than taxi drivers.
That may be the biggest change — that AHPs will be able to consider people’s jobs in the decision to insure them.