Labor Secretary Alexander Acosta and the Trump administration have come up with a potential solution within existing law.
Large companies have always had an advantage because they have more employees, which means they can provide health insurance at a lower cost. Expanding association health plans will give more small businesses and self-employed Americans a chance to get a similar bang for their buck, because they’ll be buying health insurance for a larger group of people. They can spread administrative costs, allow employers to bargain for better deals and create ways to bring more people into the market, which brings down costs for everyone.
This new association health plan proposal could help two groups of people who have been particularly hurt by Obamacare.
First, the self-employed. For example, a plumber making $60,000 a year may be paying $20,000 a year for health insurance, yet that plumber might not qualify for a subsidy under Obamacare. This rule could allow that plumber to join with others in his profession from all over the country to purchase health insurance at lower cost.
Second, employees of small businesses. The rule will allow small businesses of similar trades or geographies to join together and offer insurance to their employees. For example, bakeries and small sporting-goods stores in Chattanooga, Tenn., could come together and purchase a plan for their employees.
There are a lot of Americans who are self-employed or employees of small businesses who have been harmed by Obamacare. About 9 million people with individual market plans don’t have subsidies, which means they pay sky-high premiums — up 105 percent in the Obamacare exchanges since 2013 — out of their own pockets.
If the appeal of an association health plan lures anyone from the exchanges, it will likely be because they’ve finally found a plan that meets their needs at a price they can afford. At the same time, more than 80 percent of Obamacare enrollees receive a generous subsidy from the government to pay their premiums; they aren’t likely to walk away from their subsidies to join an association health plan.
Many people have had no attractive option under Obamacare — and 15 million Americans who are self-employed or work for a small business today are uninsured, often because health insurance is too expensive.
Association health plans would be required to comply with the same patient protections as plans at larger companies, including prohibitions against charging more or denying coverage because of a preexisting condition, canceling plans because you get sick, and imposing annual or lifetime limits on benefit coverage. Coverage protections also include the requirement to offer coverage to dependent children up to age 26 and the requirement to provide preventive health coverage free of charge to the patient.
Critics of the rule often point out that association health plans would not be mandated to cover Obamacare’s “essential health benefits,” but this is the exact same exemption Democrats made in 2010 for large employer plans, which cover roughly 160 million people, or half of all Americans. This new rule simply says that the same protections that Democrats agreed work for roughly half of all Americans should work for small employers and the self-employed, too.
For the plumber in Memphis, the songwriter in Nashville and the bakery owner in Chattanooga who have been paying through the nose since Obamacare took effect, the Trump administration might have found a solution. This new association health plan rule could allow you to buy the same sort of insurance, at a lower cost, as employees of larger companies are able to do. That only makes sense.