[T]wo unlikely allies are calling for tighter state regulation of a newly expanded – and potentially popular – type of health insurance.
The Office of the Health Care Advocate and insurer MVP Health Care on Thursday appealed to legislators to take a closer look at association health plans, which are expanding nationally and in Vermont under new rules drawn up by President Donald Trump’s administration.
The state Department of Financial Regulation already has moved to counteract the federal changes. But an MVP representative and Mike Fisher, the state’s chief health care advocate, both say they still believe many Vermonters’ premiums could escalate due to the impact of association health plans.
“We believe that this will have a very predictable, negative impact on insurance rates,” Fisher told the Health Reform Oversight Committee.
Association health plans allow smaller businesses to band together to offer health coverage. Earlier this year, the Trump administration loosened rules on such plans in an effort to foster their expansion and offer more affordable health insurance options.
For example, associations now can be based solely on geography. And sole proprietors are newly allowed to join associations.
Depending on a given jurisdiction’s laws, association health plans can be subject to less regulation than other health coverage. That’s one way in which they can offer lower premiums that may appeal to those who feel they’ve been priced out of the insurance market.
Gaps in coverage are one thing that worry association health plan skeptics. There’s also a concern that association plans will pull many customers out of insurance exchanges like Vermont Health Connect, thus driving up premiums for those who remain.
Under authority granted earlier this year by the state Legislature, Vermont officials have put into effect a host of additional regulations on such plans. Association plans have to register with the state and can be audited by the state, and they also have to cover the 10 “essential health benefits” as defined in in federal statute.
“We decided to create a robust regulatory structure … that would, as the legislation directed, protect consumers as well as try to ensure the stability of Vermont’s marketplace,” Emily Brown of the Department of Financial Regulation told legislators Thursday.
Under that enhanced regulatory regime, two organizations have received state approval to begin offering association health plans – the Montpelier-based Vermont Association of Chamber Executives, and South Burlington-based Business Resource Services.
Betsy Bishop, president of the Vermont Chamber of Commerce, said there has been “a lot negative attention” around association health plans. But she said the Chamber supported additional state regulation that enables interested parties to “stand up a strong, Vermont-based” association plan.
The Chamber’s plan has been available for only a few weeks, so Bishop said it’s hard to gauge the interest among potential customers. At one point, the chamber had a health insurance plan that covered 17,000 people.
“We don’t see it getting back to that level anytime soon – certainly not in the first year,” Bishop said.
Bishop also said the Chamber’s association plan doesn’t offer the lowest rates available to Vermont consumers. But she still believes it’s important to offer the state’s smaller businesses more flexibility on coverage and plan designs.
“Employers want greater choice,” Bishop said.
Blue Cross and Blue Shield of Vermont, which is insuring association plans for both the Chamber and Business Resource Services, has touted similar benefits for small businesses who’ve been squeezed by high health care costs.
The two association plans that have received state approval “will provide options to improve the health and wellness of Vermont employees, connect more people to essential health benefits and save small businesses and Vermonters money,” the company said in a recent announcement.
However, Blue Cross also has provided clear evidence of the potential cost impacts of association health plans to those who don’t enroll in them. The insurer asked for a 2.3 percent rate hike for Vermont Health Connect plans in 2019 due to concerns about exchange consumers departing for association plans.
Though the Green Mountain Care Board ultimately rejected that request, that’s the kind of detrimental effect that worries Blue Cross’ New York-based competitor, MVP.
“We will not be offering any association plans,” said Susan Gretkowski, who handles governmental affairs for MVP in Vermont. “We’re staying in the exchange market.”
MVP submitted a letter urging Vermont to adopt additional regulations on association health plans. Fisher, who serves as an advocate for health care consumers and affordability, has taken the same stance.
Fisher said he appreciates the association plan regulatory work of the state Department of Financial Regulation, which “did a number of very important things that we fully agree with.” However, he said, “we don’t believe they went far enough in protecting our marketplace.”
The chief concern for Fisher is that association plans still can create a “filter” effect that pulls healthier – and therefore less expensive – customers away from the insurance exchange. Referring to “risk pools” – meaning a group of individuals whose medical costs are used to set premiums – Fisher told lawmakers that “we know it is one of the oldest games of insurance to try to find a healthy pool.”
If insurance administration costs and payments to health care providers are basically the same across the system, Fisher reasoned, how else will associations save money?
“The only reason why (association health insurance) would be less expensive is if the pool has a lower morbidity – if the pool is healthier,” Fisher told legislators. “And the math that makes the premium cheaper for an association is the exact same math that will make the rest of the marketplace more expensive.”
Fisher submitted documents to the committee pledging to press for regulation and/or legislation that would require all of Vermont’s small businesses to be part of the same risk pool, regardless of whether or not they have joined an association health plan.
Bishop says such a move could make association plans less competitive with the rest of the market. But Fisher said he’s trying to keep the market stable.
“I understand why the business community wants (association plans). Of course they want it,” Fisher said. “Everyone wants lower rates. I can’t knock them for wanting lower rates. (But) they don’t have a responsibility to the community like I believe policymakers do and regulators do.”
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