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CEO DATELINE – Report: Association health plans could siphon off healthy enrollees

May 17, 2018
By Walt Williams

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As many as 10 percent of people enrolled through the Affordable Care Act or other coverage through the individual market would likely switch to association health plans should the Trump administration make good on a promise to expand access to the plans, according to a recent analysis of the proposal.

The study that appeared in the Society of Actuaries’ journal, The Actuary, concluded that 3 to 10 percent of people in the individual market would move to association health plans, with the exact amount depending on a number of factors. Most of those individuals would be healthier than the average ACA market member, meaning the average cost of claims for those who remain would rise 1.4 to 4.4 percent.

Researchers with Georgetown University, the actuarial firm Lewis & Ellis, and PTN Consulting Group authored the report.

Last year President Donald Trump signed an executive order directing the Department of Labor to draft rules expanding the ability self-employed individuals and small businesses to join together through associations to purchase employee health insurance. Trump was frustrated by the inability of Congress to repeal ACA and viewed association health plans as one way to circumvent the “undue restrictions” created by the law.

Association health plans would not be bound to the same coverage requirements as individual market plans and therefore be cheaper, making them an attractive option for young and healthy individuals. Still, the study’s authors acknowledged a lack of certainly about what form the Labor Department’s rule on association health plans would take, which made it difficult to narrow the range of individuals likely to enroll in the plans.

The researchers considered arguments from both proponents and opponents of the plans and concluded both sides raised legitimate points. Younger, healthier inviduals are more likely to find cheaper coverage through the plans, but anyone who remains in the individual market will probably face higher premiums as a result.

Still, the authors noted their conclusions were derived from 2016 data and therefore may not accurately reflect trends in current enrollment resulting from recent developments, such the repeal of the ACA mandate penalty.

“The cumulative effect of these changes is likely to result in a further shift away from ACA-compliant individual market coverage and a higher relative morbidity of the ACA-compliant risk pool than is reflected here,” they wrote.