Association health plans, which returned to Vermont this year after federal regulations were revised, would lose a key advantage if a Senate bill is approved.
State lawmakers are considering a bill that would essentially eliminate a new type of health insurance plan in Vermont.
S.103 proposes regulations that, if enacted, would erase a key advantage that association health plans have over plans on the state’s insurance exchange. The change would take effect in 2020.
Proponents, including the Office of the Health Care Advocate, support the bill because they worry that the newly expanded association plans will have a corrosive effect on Vermont’s insurance market.
But those who jumped into the association health plan market this year argue that S.103 won’t do anything to address the state’s health care affordability problems.
“A knee-jerk reaction to what has been built over the past year … doesn’t serve anybody,” said Christine Oliver, a consultant to South Burlington-based Business Resource Services.
Association health plans, which allow small employers to band together to offer health insurance, were significantly expanded via new federal rules announced last year by the U.S. Department of Labor. President Donald Trump’s administration touts association plans as an important tool to offer more affordable coverage for small businesses and entrepreneurs.
There was concern, however, that association plans could offer substandard coverage while taking a significant number of customers from insurance exchanges like Vermont Health Connect.
“The fear is that, if all the healthy people get pulled out of the exchange market … the exchange will be left with the less-healthy, older population – and therefore, their rates will go up,” said Sen. Ann Cummings, D-Washington and chair of the Senate Finance Committee.
Vermont countered the Trump administration with its own rules governing association health plans, including a mandate that associations cover essential health benefits as defined under federal law. But some say those rules don’t do enough to protect the state’s insurance market.
That’s where S.103 comes in. Introduced by Sen. Ginny Lyons, D-Chittenden and chair of the Senate Health and Welfare Committee, the bill would take away an important regulatory and financial benefit of association health plans by not allowing small businesses and individuals to be treated as larger groups in the insurance marketplace.
The provision, which is known as the look-through doctrine, “does away with the benefit of being an association,” Cummings said.
The bill’s backers include the Office of the Health Care Advocate and insurer MVP Health Care.
New York – where MVP is based – has adopted the look-through doctrine. “The practical effect is, there are no associations in New York … and we would like to see that here,” said Susan Gretkowski, a senior government affairs strategist for MVP.
Mike Fisher, the state’s chief health care advocate, told lawmakers that association plans “threaten Vermont’s health insurance marketplace by splitting a larger risk pool into multiple smaller pools.”
“I believe that the look-through is the right thing to do to protect Vermonters,” Fisher said.
But others say S.103 is misguided.
Business Resource Services and the Vermont Association of Chamber Executives are the two entities licensed to offer association health plans in the state. Both Oliver and Betsy Bishop, president of the Vermont Chamber of Commerce, said many members are saving money on premiums and out-of-pocket costs through association coverage this year, and they urged lawmakers to not short-circuit that benefit.
Bishop also noted that the two organizations supported previous state regulations to ensure that association plans were offered locally and responsibly. “We’re part of the Vermont community,” she said.
Blue Cross and Blue Shield of Vermont – which is insuring all of the state’s association health plans at this point – also opposes S.103. Blue Cross spokesperson Sara Teachout said lawmakers should look at broader ways to stabilize the health insurance market and address affordability issues.
“We believe that associations are not the cause of this problem, but they’re a symptom of a larger problem in the marketplace,” Teachout said.
While association plan backers urge caution and patience, the health care advocate is pushing hard for immediate action. About 5,000 Vermonters are covered by association plans this year, but that’s not a reason to drop further attempts to regulate them, Fisher told lawmakers.
“I know that it’s harder for the Legislature to take action when they’re already up and running,” Fisher said. “And I’m sure (insurers) knew that, too.”
