The new association health plans (AHPs) the Trump administration has proposed could attract about 4.3% to 15% of the people who now have individual major medical coverage, according to an independent team of analysts.
If the analysts are correct, the new, expanded AHP market could serve about 670,000 to 2.4 million people. The AHP market could be about four times to 16 times as big as the short-term health insurance market is today.
Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, prepared the analysis together with Josh Hammerquist, an actuary at Lewis & Ellis Inc., and Pete Nakahata of PTN Consulting Group L.L.C. Nakahata helped the Centers for Medicare and Medicaid Services set up the Affordable Care Act public exchange system.
The analysts’ paper appears in the online version of The Actuary, a magazine published by the Society of Actuaries.
The analysts used data from the Urban Institute and other sources to estimate how many of the 3.6 million people with off-exchange individual major medical coverage and how many of the 12 million people with ACA public exchange plan coverage might find a way to shift to AHP coverage. The analysts estimated that roughly 2% to 6% of the exchange plan users, and 5% to 18% of the off-exchange coverage holders, might shift.
The AHP Program
Employers in states that let employers participate in single-state AHPs can already join single-state AHPs today.
Under the Trump administration proposal, the U.S. Department of Labor would make setting up a multi-state, multi-employer health plan easier, by creating a new, looser definition for the term “employer” and, possibly, by brushing away state restrictions on AHP formation. The proposed AHP program would let an AHP operate under the somewhat more flexible benefits and underwriting rules that now apply to large, self-insured employer health plans, rather than the tight rules that apply to small-group major medical coverage and individual major medical coverage.
The analysts prepared their paper to create a framework health policy players can use when talking about how the AHP program might affect the individual major medical market.
“Critics argue that AHPs are likely to be attractive to a healthier and younger population, leaving an older and sicker population in the ACA-compliant individual and small-group markets,” the analysts write. “This in turn could result in higher premiums and fewer plan choices.”
Agent and Broker Impact
For health insurance agents and brokers, the paper may be a source of AHP marketing ideas, or ideas for keeping individual major medical clients from switching to AHPs.
The analysts note that how well AHPs will perform will depend on factors such as what happens to other federal health insurance market rules and programs, and what states do.
If, for example, regulators made it easy for self-employed people to use AHPs without documenting that they were self-employed, that would probably increase the number of people with individual major medical coverage who would switch to AHPs, the analysts write.
The analysts say AHPs could be especially appealing to people who are getting no ACA public exchange plan subsidies, such as people with annual income over 400% of the federal poverty level. Those people are classified as having a high income, by ACA standards, and get no premium subsidy help.
— Read Here’s How Trump’s Association Plans Might REALLY Work on ThinkAdvisor.