The Trump Administration has proposed new rules that will allow more small businesses and self-employed workers to band together to buy insurance.
The objective to encourage competition in the health insurance markets and lower the cost of coverage.
The proposed rule, which grew out of an executive order issued in October, would broaden the definition of an employer under the Employee Retirement Income Security Act of 1974, or ERISA. It would allow more groups to form association health plans and bypass ACA rules. ERISA is the federal law that governs health benefits and retirement plans offered by large employers.
The new rule would remove restrictions on the establishment of association health plans under ERISA. Moreover, the new rule prevents health plans from restricting membership based on pre-existing conditions and charging higher premiums on senior citizens.
Trump: Current Health Plans
Currently, association plans are subject to rules that govern small group and individual insurance markets. In addition, members must be part of the same industry to form an association health plan.
Trump: The New Rule
Trump’s rule allows workers in unrelated professions to band together and obtain coverage if they are in the same geographic region. It allows association health plans made up of members of the same industry to offer coverage to workers all over the country. Thus, a national trade association could offer coverage to members in Massachusetts as well as New York, for instance.
State insurance regulators are concerned that expanding association health plans destabilizes the small-group and individual insurance markets by taking healthy people out of those markets. This increases the risk pool and raises premiums for consumers that remain. New association health plans would exclude prescription drugs from coverage, thus putting members at risk.
Supporters claim the opposite is the case. In fact, these Trump association health plans will offer comprehensive coverage in order to stay competitive.