Feature

Association insurance pushes on despite court ruling


 

When the Trump administration in June 2018 issued rules making it easier for small employers to band together to buy health insurance, “we started looking immediately,” recalled Scott Lyon, a top executive at the Small Business Association of Michigan.

Although he offered traditional small-group health insurance to his association’s employees and members, Mr. Lyon liked adding a new option for both: potentially less expensive coverage through an association health plan, which doesn’t have to meet all the rules of the Affordable Care Act (ACA).

Now, a few months in, “we’ve got 400 companies and a couple of thousand workers signed up,” said Mr. Lyon.

Nationally, an estimated 30,000 people are in such association health plans, a type of health insurance seeing a nascent resurgence following an initial drop-off after the ACA took effect in 2014.

Most of the new enrollees joined through groups like Mr. Lyon’s or local chambers of commerce, farm bureaus, or agriculture-based cooperatives. Such groups see the plans not only as a way to offer insurance, but also as an enticement to boost membership.

In the first legal test, however, U.S. District Judge John Bates at the end of March sided with 11 states and the District of Columbia challenging the law. He invalidated a large chunk of those June rules, saying the administration issued them as an “end-run around the Affordable Care Act.”

So what now?

Unless the government seeks – which it has yet to do – and is granted a stay of the judge’s order, “plans formed under the vacated sections of the rule are illegal,” said Timothy Jost, an emeritus health law professor from Washington and Lee University, Lexington, Va.

Still, that won’t mean anything for existing plans if the states or federal regulators choose not to enforce the ruling, Mr. Jost said.

And that could cause more confusion in the marketplace.

While the states that brought the challenge are expected to enforce the ruling, some other states support broader access to association health plans, said Christopher Condeluci, an attorney who represents several such plans, including the one formed by Mr. Lyon’s group.

“These plans are not an end run around the ACA,” said Mr. Condeluci.

Association health plans already established under the administration’s rules cover “virtually” all the federal law’s essential health benefits, he said, with the exception of dental and vision care for children.

Local chamber of commerce plans are mainly continuing business as usual while watching to see if the government will appeal, said Katie Mahoney, vice president of health policy at the U.S. Chamber of Commerce.

A few, including a plan offered through the Las Vegas chamber, may limit new enrollment for sole proprietors, she said, as the judge sharply questioned whether they qualified as “employers” under federal laws.

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