In a recent press conference and op-ed “Make the consumer king” in the Courier-Journal, Sen. Rand Paul proposed expanding the “association health plan” (AHP) provision in the Senate health repeal bill, claiming it would help ensure “every Kentuckian” can have “good, inexpensive coverage” and protections like those for pre-existing conditions.
In fact, his proposal would create a race to the bottom on such protections that would worsen problems with affordability and leave more Kentuckians at risk in plans that do not cover the treatments they need for better health.
The Senate bill, as currently drafted, would allow groups such as trade associations and chambers of commerce to sponsor health plans, which small businesses and self-employed people could then enroll in. These plans would be able to set premiums based on health status and be subject to fewer consumer protections and standards.
Few details are available, but Paul has indicated he wants to broaden the AHP provision in the Senate bill to make AHPs available to more individuals and small groups, and to allow AHPs to avoid “Obamacare regulations.”
Paul’s idea would only amplify the serious problems with the Senate’s AHP provision:
Premiums would rise in regular individual-market and small-group plans
AHPs could be far less comprehensive than regular insurance coverage in a state’s individual and small-group markets, and AHP enrollee premiums could be set based on people’s health status and risk. This creates a sharp disparity that would lead healthier people and small groups to flock to the AHPs, in order to get cheaper premiums. Meanwhile, sicker and more costly people and small groups would be left behind in the traditional insurance markets, and their premiums would rise. Plus, if an AHP enrollee were to get sick, the cost of remaining in the AHP would rise sharply in the future.
Undermines states’ ability to protect consumers
AHPs as envisioned by Sen. Paul would be largely exempt from state regulation, such as benefit requirements and financial stability standards. This could put consumers in these plans at risk and they wouldn’t be able to rely on state oversight – the usual “cop on the beat” to deal with complaints or problems that arise.
AHPs don’t improve pooling, they destroy it
Sen. Paul’s op-ed says that individuals and small businesses signing up for coverage today have to “go it alone” and that AHPs would be a new way for people to pool together in order to get “more leverage to get protections against pre-existing conditions and high prices.” But under current rules no one has to “go it alone.”
In both the individual and small-group insurance markets, individuals are part of larger pools; premiums are set based on everyone a given insurer covers in that market — not just one small firm, or family, or individual. Moreover, under current rules no one in Affordable Care Act plans in the individual and small-group markets can be charged higher premiums due to their health status or past medical treatments. They have a full complement of protections against problematic insurer practices from the past. AHPs would bring many of those practices back.
Far from an innovative solution to coverage, Sen. Paul’s idea unravels the protections now in place and threatens to destabilize insurance markets. Just like the ideas contained in the Senate repeal plan, it would set the nation back on the goal of affordable, quality health care for all.
This column originally ran in the Courier-Journal on July 10, 2017.