Trump administration proposes rules for health plans without certain Affordable Care Act protections

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WASHINGTON – The Trump administration proposed new rules on Thursday to make it easier for small businesses and individuals to buy a type of health plan long favored by conservatives that could bypass some of the insurance protections built into the Affordable Care Act.

The proposal, issued by the Labor Department, would carry out the most significant part of an executive order that President Donald Trump signed in October, directing the government to foster more alternative types of insurance. Proponents say that the so-called association health plans would be less expensive, while critics – including the insurance industry – fear that they would promote substandard coverage and weaken the ACA’s already fragile insurance marketplaces.

Such plans have existed for years under limited circumstances in which small businesses band together to buy insurance. Just six percent of relatively small U.S. companies used this approach last year, according to the Kaiser Family Foundation.

The administration’s proposal essentially would expand the availability of association health plans in a variety of ways. It would allow individuals to buy them for the first time. And in a significant change, it would classify such plans the same way as large employers’ insurance, which means that they would no longer have to include a set of 10 essential health benefits that the ACA requires of insurance sold to individuals and small companies.

The proposal also would broaden the circumstances under which association health plans could be created.

But the administration would preserve the ACA’s rule that bars insurers from charging certain customers more based on their health status or from refusing to cover those with conditions that are expensive to treat. Insurers had feared that dropping this prohibition would be particularly damaging to the ACA’s marketplaces because it might encourage healthier people to turn toward these alternative health plans while leaving the marketplaces with expensive plans purchased by people who are sick.

The draft rules make clear that association health plans may be sold across state lines. However, they do not go as far as some conservatives have wanted – freeing the plans from state regulation. Instead, the rules invite public input “about the relative merits of possible exemption.”

The rules, posted on the Office of Management and Budget website Thursday morning, are open to 60 days of public comment starting Friday.

In proposing the changes, the Labor Department predicted that up to 11 million currently uninsured Americans who work for small businesses or are self-employed could benefit from the expansion of association health plans. “These plans would close the gap of uninsured without eliminating options available in the health care marketplace,” a department news release said.

The proposed rules do not address a second change that was part of Trump’s executive order – an expansion of the use of skimpy, short-term insurance that has been meant as a bridge for consumers between jobs.