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Iowa Gov. Approves Expansion of Association Health Plans

Iowa’s governor has signed a bill allowing for the expansion of association health plans within the state.

Iowa governor Kim Reynolds signs AHP expansion law.

Source: Thinkstock

By Thomas Beaton

- Governor Kim Reynolds has signed a bill that will allow small groups and agricultural associations to create association health plans (AHP) that operate outside of the individual health plan market.

Senate File 2349 requires associations to collect annual dues from members, contract with local health plan entities, and meet other solvency requirements to create an AHP. The legislation does not consider AHPs to be official insurance plans, so small groups and associations can create plan offerings that don’t follow Affordable Care Act guidelines.  

The bill received support from state policymakers and agricultural stakeholders before it was sent to Reynolds’ desk for a signature.

The House voted 69-30 to pass the legislation on March 21st. Six days later, the Senate voted 37-11 to pass the bill. The Iowa Farm Bureau Federation (IFBF) advocated for the bill, which allows the organization to partner with Wellmark BlueCross BlueShield to offer AHPs to IFBF members.

IFBF President Craig Hill said in a press release that the law is a good start for solving healthcare access issues related to individual insurance markets. He added that IFBF members can expect benefits to be available at the start of 2019.

“According to our annual membership survey, the cost of healthcare is the number one concern facing our members,” Hill said.

“That’s why more than 1500 IFBF members answered the call for action and urged Iowa lawmakers to pass [the bill]. This legislation came together because our organization exists to serve its members.  Although it isn’t meant to be a solution for all, we are pleased that lawmakers and the Governor agree it is an option for thousands who need an affordable health plan that works until Congress passes a permanent solution to the ACA-inspired health care coverage crisis.”

The law follows on the heels of federal and state efforts to expand the sale of AHPs and allow individuals to forgo ACA-regulated health plans.

President Trump has issued an executive order to expand the sale of AHPs and federal regulators, including CMS and the Labor Department, have issued industry guidance on AHP expansion.

CMS has proposed a rule that would allow consumers to stay on association health plans and other short-term plans for a twelve-month period. The Labor Department proposed a similar rule that allows small businesses and trade groups to form AHPs in lieu of employer-sponsored or individual health plans.

However, when Idaho tried to expand association health plan options earlier this year, the effort was struck down by a CMS review.  

Governor Butch Otter issued a state-level executive order in late February to expand AHP sales. However, CMS Administrator Seema Verma issued guidance that indicated Otter’s plan was a direct violation of ACA rules. Verma expressed a desire to support Idaho’s plan if the state can develop criteria that meets certain ACA market requirements.

The Academy of Actuaries has warned state governments that expanding AHP sales would create significant disparities in health plan affordability and access.

The Academy suggested that healthy beneficiaries would enroll in the AHPs instead of individual ACA plans and unintentionally destabilize individual risk pools. Destabilized risk pools would likely lead to higher costs for unhealthier people. AHPs could also be more selective in their risk-adjustment policies and block unhealthy people from enrolling in a cheaper AHP.

Reynolds, a Republican, believes that the bill gives Iowa’s residents a financially viable healthcare option within an unstable health insurance market.

“Thank you to Farm Bureau for their work and willingness to provide relief to Iowans who can no longer afford their health insurance,” Reynolds said. “Thank you also to Iowa Insurance Division Commissioner Doug Ommen for his leadership on this issue. Because of this bill, thousands of Iowans will now have affordable health care coverage.”


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