New Study on Court-Endangered Chamber of Commerce AHPs Released
Last week’s ruling by a U.S. District Court in Washington D.C. has, among other issues, endangered the operation of regionally-defined association health plans (AHPs) under the Department of Labor’s June 2018 regulations. The leading force behind these regional AHPs are chambers of commerce. At the time of this report’s writing, chambers are the single most common organization sponsoring new regional AHPs, and their health plans illuminate important contrasts between reality of this emerging insurance category and some of the criticisms levied against it.
A new analysis of chamber-sponsored AHPs observed among its findings:
- Out of recently launched AHPs operating under the new regulation, 58 percent are sponsored by a chamber of commerce (whether local, regional, or state chamber)
- While the new AHP regulation was released during a Republican administration, over 1 in 5 new chamber AHPs includes sponsorship by chambers not associated with conservative politics such as Urban, LBGT, and Hispanic chambers of commerce
- For multi-chamber AHPs, the average number of co-sponsoring chambers is 17
- 18 AHPs sponsored by chambers of commerce and operating under the new regulation can be found in 10 states
- The vast majority of chamber AHPs (94 percent) use third-party insurance companies rather than self-funding their health benefits
- Chambers vary on the tactics used to ensure plan stability and discourage adverse selection
Through the new Department of Labor regulation, the same large company insurance model that already covers roughly 95 million Americans was made available to small businesses through associations. This change has been a matter of market access. The definition and rules related to large company health insurance have not changed. Instead, the playing field between small companies and large companies was leveled with respect to health insurance costs. The preservation of this leveling is likely dependent on a successful appeal of Judge Bates’ ruling unless Congress decides to act.
With the ACA markets also endangered by a recent court ruling, it is a possible scenario that both the ACA and AHP markets will be impaired leaving chaos in markets for private insurance. It is conceivable that a bipartisan bill could be sponsored between the two major parties in Congress that implements a nominal individual mandate fine (and thus maintaining the ACA’s constitutionality as a tax instrument) in exchange for a formalization of the new AHPs rules within law rather than regulation.
The full findings of the chamber of commerce AHP analysis and its methodology can be found at “Study: Chamber of Commerce Association Health Plans Building Political Bridges While Refuting Opposition.”