Impact of AssociationShortTerm Health Plans on States and Consumers Introduction Sara Collins PhD Vice President Health Care Coverage and Access The Commonwealth Fund Commonwealth Fund Briefing ID: 697328
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Slide1
Commonwealth Fund Briefing
Impact of Association/Short-Term Health Plans on States and ConsumersSlide2
Introduction
Sara Collins, Ph.D.
Vice President, Health Care Coverage and Access
The Commonwealth Fund
Commonwealth Fund BriefingSlide3
Implementing
The Presidential Executive Order
Association Health Plans
A framework to increase risk of fraud, insolvency and market instability
January 25, 2018
Kevin Lucia, J.D., M.H.P.
3Slide4
Presidential Executive Order
October, 2017
Expand
the availability of and access to alternatives to
ACA-compliant insurance
Short-Term Limited Durational
Plans (STLDPs)Proposed Regulations at
OMB
Association Health Plans (AHPs)
Proposed
Regulations Released January 5, 2018Health Reimbursement Arrangements (HRAs)Augmented by loss of the individual mandate
4Slide5
Short-Term Limited Durational Plans
Executive
Order
Proposed regulations expected anytime
Expand
availability of
STLDPs
Longer duration, renewable
Exempt
from ACA market
rules
States have few, if any, standards for STLDPsImplicationsAbility to cherry-pick healthy individualsDestabilizes regulated individual marketStates may closely regulate STLDPs5Slide6
Association Health
Plans
Executive Order
Allow individuals
and small employers to purchase health insurance across state lines through
professional
or trade associations
.HistoryProposal repeatedly defeated in Congress
Rejected
by
a broad spectrum of stakeholders, including the National Association of Insurance Commissioners
History of fraud, insolvency and market instability6Slide7
Association Health
Plans
Under Proposed Regulation, AHPs can:
Form for
the sole purpose of offering health
insurance
Form without any
common interest beyond shared industry
or
shared location
Cover members of all sizes, including
self-employed individuals and sole proprietors (“working owners”)Be considered “large group” coverage under federal lawNot comply with critical market rules and consumer protections, including coverage of EHBCharge higher rates, beyond those permissible under the ACA, based on factors such as age, gender, occupation, and group sizeNo “health status”
of
member groups to determine eligibility, premiums, or benefits
7Slide8
Association Health
Plans
Regulatory Takeaways
Easy
to
Form
Easy to expand across state
lines
Uneven playing field between AHP and
ACA compliant markets
Open questions on continued scope of
state authority8Slide9
Association Health
Plans
Risks
Increased Risk of:
Fraud
Insolvency
Market
Segmentation
9Slide10
Association Health
Plans
Critical Question
Limiting state authority increases risk of AHP fraud, insolvency and
market instability
Questions
To what extent can states regulate AHPs without being inconsistent
with
the proposed federal framework for AHPs?
In the future, will federal regulators exempt certain AHPs from much of state authority?
10Slide11
Thank you!
Kevin Lucia
, J.D., M.H.P
.
Research Professor
Georgetown University
Center on Health Insurance Reforms
kwl@georgetown.edu
202-687-4928
11Slide12
DC Health Benefit Exchange Authority
Mila Kofman, Executive Director
Commonwealth FundSlide13
Proposed U.S. Dep’t of Labor Rule and Request for Information: Association Health Plans (AHPs)
Many efforts by the Administration to
destabilize the ACA through
Administrative actions.In all areas states can take action to keep their markets stable and affordable.
EXCEPTION: proposal on AHPs
Proposal on AHPs: preemption of states (at best not clear and will have to be litigated). U.S. Dep’t of Labor reinterpreted ERISA (setting aside 45 years of guidance).
ERISA (Employee Retirement Income Security Act of 1974) applies to pension and health plans offered by private employers. Restricts state oversight and state standards.
13Slide14
AHP Proposal Consequences:
Opens door to fraud and
scams, insolvencies, and market collapse
New ERISA ambiguity opens the door to scams. Long history of criminals using ERISA as a shield to evade state law
collect premium for fake insurance and leave small businesses and individuals with millions in unpaid medical bills. (last cycle of scams: more than $250 million in unpaid medical bills)
fake Unions, fake associations;
Promoters challenge state actions arguing ERISA preempts states
Victims: real associations, small businesses and self-employed people14Slide15
U.S. Dep’t of Labor cannot
protect businesses and individuals:
S
tate insurance regulators: prevent, quickly find, and quickly shut down scams (licensing, on the ground, and broad authority)
U.S. Dep’t of Labor: can’t prevent, can’t find quickly, and can’t shut down a scam quickly
Look at plans once every 300 years (
Olena
Berg testimony)Cease and Desist (C&D) authority under ACA used once (Nov 2017) -- C&D authority is similar to state authority to shut down a scam without going to court. Nov 2017 action: went to court, delay means additional victims being scammed and assets continue to be depleted (58% to 85% of premium was paid for admin expenses; $26m left in unpaid medical bills)Registration requirement for AHPs called Form M1 – no evidence of actual review (2004 Georgetown study; 2012 Deloitte study); incorrect or incomplete registrations; $1000/day fine 15Slide16
Christopher Koller
President
Slide
16Slide17
Value of Association Health Plans
for Employers is Perceived Choice and Control AHP’s can only offer lower costs ifThey offer fewer benefits
They take the younger, healthier patients from the general risk pool
No “group purchasing power” for medical services
AHPs do generate revenue for the broker/aggregator
1/25/2018Slide 17Slide18
AHP rules will lead to variety of enforcement stances by State DOIs
- So long as no Federal pre-emption,
s
ome states will aggressively enforce and oversee AHPs, as in pre-ACA era:Marketing rules, membership rules, out of state oversight, certification. (see WA)
Others will not actively enforce.
Compare to original construct of ACA where state oversight was done within federal framework.
1/25/2018
Slide 18Slide19
As Result – Insurance Stability and Consumer Protections will Vary
1/25/2018
Slide
19
Risks
- Loss of healthy people from risk pool - Fraud and insolvency of AHP - Consumer information/benefits disclosure - Complaints and investigations. These risks increase if federal pre-emption granted to AHP’s- enforcement reverts to USDOL: which acknowledges it does not the resources for the
work