Preston Rutledge, the head of EBSA Preston Rutledge (Photo: Shawn T. Moore/DOL)

Some people are asking the Trump administration to make its proposed multi-state association health plan program more flexible and more generous.

Some are warning the administration that even the flexibility and patient protection rules built into the current AHP proposal will cause many, or most, AHPs to spiral down the drain.

Some are giving the administration ideas for ways to keep AHPs out of the drain.

The Employee Benefits Security Administration, an arm of the U.S. Department of Labor, released the proposal in January. Many organizations already sponsor single-state AHPs.  The EBSA proposal would make it easier for small employers to join multi-state AHPs. The AHPs might enjoy some of the same flexibility that large-group health plans now enjoy, but they apparently would be subject to Affordable Care Act requirements.

EBSA would promote multi-state AHP use by changing the definition of “employer” that DOL uses when deciding whether the employers in a group have enough in common to team up to sponsor a health plan. EBSA has suggested that any bona fide association could set up an AHP for small employers, even if the association had no purpose other than to provide AHP coverage.

(Related: 7 Facts About the Trump Team’s New Association Health Plan Proposal)

EBSA had received more than 700 comments by Tuesday, the commenting deadline. At press time for this article, it had posted 718 of the comments, and two petitions, on the web.

The Senate finally confirmed Preston Rutledge, President Donald Trump’s EBSA chief, in December. Many of the commenters have submitted professionally crafted paper letters addressed directly to Alex Acosta, the Labor secretary, or to Rutledge.

Others have used the federal government’s system to file comments under the name Anonymous.

A copy of the proposal is available here.

Copies of the comments are available here.

Here’s a look at some of the ideas we found in the comment letters we sampled.

1. Misery

Many commenters have written to say that are having a hard time finding health coverage they can afford.

One farmer wrote, anonymously, that his family lost access to group health coverage when the rules changed, and his business was required to have at least one non-family-member employee to qualify to buy group coverage. The man said he and his wife have tried to cope by getting health care cost-sharing ministry plan coverage, which is not regulated by any state or federal regulator, for themselves, and Children’s Health Insurance Program coverage for his two sons.

A real estate agent from North Carolina begged regulators to help real estate associations provide AHP coverage. She said that getting ACA-compliant individual coverage for herself and her husband would cost about $2,000 per month. “We certainly cannot afford it,” she wrote. “Having affordable health care with menu options, such as maternity and psychiatric care not needed or wanted, would drive down the costs.”

But Kevin Longino, a kidney transplant patient and the chief executive officer of the National Kidney Foundation, wrote that people with serious health problems could suffer if they enroll in AHPs are not subject to the current Affordable Care Act benefits requirements.

Even if an AHP “covers kidney transplants,” it could discriminate against transplant patients by refusing to cover the drugs transplant patients take after they get the transplants, Longino wrote.

Longino warned against the idea of letting employers and individuals reduce their health coverage costs by doing without benefits such as transplant coverage. “People purchasing health insurance through an AHP, unaware of their future health status, may later learn that they don’t have coverage of critical benefits when they most need them,” Longino said.

2. Pleas for tweaks

Many commenters wrote to EBSA to ask for modest changes in the AHP program design, or to ask that the program be made more appealing for employers, associations or workers.

Wendy Block wrote on behalf of the Michigan Chamber of Commerce, to object to the idea that groups formed solely to provide AHP coverage could sponsor AHPs.

States have already had problems with the stability of multiple employer welfare arrangements (MEWAs), Block wrote.

“Allowing AHPs to be sponsored by artificial associations furthers the potential for less qualified, less scrupulous entities to enter the AHP space, potentially resulting in the creation of unsustainable AHPs, ” Block wrote.

Elizabeth Mendenhall, president of the National Association of Realtors, said the AHP program should be friendlier to self-employed people, including self-employed people who work only part-time.

Mark Koziel, an executive at the American Institute of Certified Public Accountants, asked EBSA to limit state-by state regulation of national AHPs. If a national AHP had to comply with 51 sets of state and District of Columbia laws, that could undermine the AHP program, Koziel wrote.

3. AHP reality checks

Some commenters know more than the average commenter about how AHPs really work: They run single-state AHPs.

Dr. Clyde Chumbley, the chief executive officer of the Wisconsin Medical Society, leads an organization that has had single-state AHPs in place since 1946.

Chumbley said regulators have to grandfather existing AHPs in or give existing AHPs at least three years to adapt to the new rules.

4. Insurers

Matthew Eyles of America’s Health Insurance Plans, Anthony Mader of Anthem Inc. and Jan Dubauskas of the IHC Group all sent in comments from the health insurer’s perspective.

Mader, for example, asked EBSA to make sure to let the AHPs that are already in existence continue to operate under the current rules.

Dubauskas said it looks as if EBSA would subject the new multi-state AHPs to too many of the current Affordable Care Act rules.

“We do not believe smaller insurers will participate in the AHP without being provided with options to explore rates based on claim experience or health status,” Dubauskas wrote.

5. Death spiral theory

Chumbley, the health insurance company representatives, and many other commenters talked about the possibility that, under the proposed rules, high-cost groups would flock to AHPs, pay the same rates as low-risk groups, and smother the AHPs.

Jason Middaugh, a benefits consultant in North Dakota, wrote that keeping an AHP from charging a high-risk employer higher premiums would “almost certainly create what is commonly called a ‘death spiral.’”

“If there is no adjustment for claims experience of a member firm (not an individual), the healthier and younger employer groups above 50 lives within the AHP will be solicited by competing insurance companies, and, receiving lower premium offers, will drop out of the AHP, leaving less healthy and smaller employers with higher premiums,” Middaugh wrote. “This cycle will repeat, year after year, until the AHP expires.”

Chumbley said being able charge higher rates for groups with high claims is critical.

The nondiscrimination provisions in the proposed rule “would circumvent the risk assessment process” and keep associations from accurately assess current and new members.

The provisions ‘threaten the financial stability of existing AHPs and could create structural issues that could lead to future insolvency,” Chumbley wrote.

Mark Hall, of Wake Forest University, noted that several states have run into problems with single-state AHP programs in the past.

“A leading example is the market collapse that occurred in Kentucky in the 1990s,” Hall wrote. “Kentucky implemented market reforms but exempted AHPs from these reforms, including rating reforms. This resulted in healthy people seeking coverage through associations, which were not community rated. This left unhealthy people to seek coverage in the regulated markets. Carriers began canceling health insurance policies and fleeing the state, leaving a decimated market.”

6. Rules and programs

Some commenters suggested easing death spiral risk by adding the kinds of risk-adjustment program that the Medicare Part D prescription drug program and the Affordable Care Act public exchange system have.

Eyles also recommended the following ideas:

  • Limit enrollment periods, and lock member employers in for “lock-in” periods, to reduce enrollee churn.
  • Let states oversee AHPs, to protect the enrollees against AHP fraud and insolvency.
  • Put a list in the final rule that shows which batches of regulations, guidance and advisory opinions the final AHP regulations override.

Mader, the Anthem executive, recommended that regulators let health insurers own or control AHPs.

Health insurers have the experience to deter fraud and abuse at AHPs, Mader said.

7. Medical underwriting

Dr. Joseph Crowley, president of the American Dental Association, and Kathleen O’Loughlin, the executive director, argued that the best strategy is to let AHPs manage risk by charging higher-risk employers more.

“The utilization of experience rating at the individual group level… would allow AHPs to offer a better pricing structure and allow the varying claims experience to offset higher costs,” Crowley and O’Loughlin wrote.

— Read CMS Tries to Flush ‘Sick Creep’ Out of Medicare Advantage Rates on ThinkAdvisor.

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