- An October executive order that expands the availability of short-term association health plans (AHPs) could present significant challenges for state governments and consumers, asserted AHIP, BCBS, and a number of other payer organizations in an open letter.
The executive order allows groups of businesses and consumers to purchase low-cost AHPs that don’t offer the same essential health benefits and other mandatory protections as full-fledged plans under the Affordable Care Act.
The order also allows employees to pay their employer-sponsored health plan premiums through health reimbursement arrangements (HRAs), which are commonly used to pay for cost-sharing expenses.
AHIP and the other signatories explained that the executive order may lead consumers to seek out cheaper health plans with insufficient health benefits, while the use of HRAs may justify employers to increase premiums.
“We are concerned that [the expanded availability of AHPs] could create or expand alternative, parallel markets for health coverage, which would lead to higher premiums for consumers, particularly those with pre-existing conditions,” the letter says.
“Further, these actions destabilize the health insurance markets that guarantee access to comprehensive health coverage regardless of health status.”
Short term health plans can be sold for longer than three months in a given year under the executive order, which may increase the likelihood that the regular individual risk pool becomes unbalanced as healthier individuals seek out less comprehensive and inexpensive insurance options for long-term periods.
AHPs are not required to provide essential health benefits and can deny coverage to individuals with a pre-existing condition and may decrease healthcare coverage access for these individuals. AHPs could skew risk pools to only enroll individuals that are healthier and less costly instead of balancing risk pools with a mix of healthy and unhealthy beneficiaries.
“If short-term plans are allowed to be sold as a long-term alternative to regular health insurance, they will attract healthier consumers away from the regular insurance risk pool and endanger people’s access to comprehensive coverage,” the healthcare organizations added.
“We thus ask the states to act swiftly if the federal rulemaking allows these plans to last beyond a reasonable ‘short term.’ We also urge states to require clear disclosures to consumers for these plans, as many states have already done.”
The organizations added that state insurance offices could reduce the potential negative effects of the executive order by restoring the duration of short-term AHPs to three months, requiring clear disclosure about benefits from AHPs, and monitoring AHP enrollment.
“If the proposed federal rules are weakened for short-term plans, AHPs, or HRAs, we urge state insurance regulators to take action to protect consumers in your states,” the organizations concluded. “We thank you for your commitment to serve and protect the people in your state.”