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Trump order could give Louisiana businesses cheaper health insurance. But at what cost?

June 27, 2018
By Sam Karlin
Originally Posted on The Advocate

Small businesses and the self-employed in Louisiana could soon have access to new health insurance plans as a result of a Trump administration order expanding access to Association Health Plans. 

But hurdles remain before the plans will be a viable option here. And critics warn that the Association Health Plans (AHPs) will offer worse health coverage, further destabilize the individual market, and could lead to a resurgence of fraudulent operators who ran health insurance scams in the state in past decades.

Blue Cross Blue Shield of Louisiana, the state’s largest health insurer, said it is studying the new rule, and will support AHPs if they offer affordable coverage. The insurer also voiced concerns about the plans, as did the national Blue Cross group, which raised detailed issues in a public comment on the new rule. 

“Association Health Plans are complex,” said Cindy Wakefield, Blue Cross Blue Shield of Louisiana’s vice president of strategic communications. “They have been tried before, and frequently, they have not been successful. We do have some concerns about the long-term viability of such plans.”

The Trump administration this month rolled out its new rule as part of an executive order that relaxes regulations on AHPs in an effort to give more, smaller businesses access to the plans. Association Health Plans allow smaller businesses in an association to band together to gain access to the types of plans larger groups have.

That in turn allows the businesses to get plans governed by looser regulations enjoyed by large groups, and generally cheaper plans. The Trump rule will also give those businesses access to insurance plans that don’t include mandates like the Affordable Care Act’s 10 essential health benefits--things like pediatric services, mental health and substance abuse, maternity care and emergency services.

Certain AHPs could go into effect as soon as September. 

The Louisiana Association of Business and Industry is an example of an association that could offer new plans under the rule. Renee Amar, who heads up LABI’s health care policy, said the business group will likely retool its blue chip plan as part of the new rules in an effort to attract small businesses looking for cheaper health insurance.

After the Affordable Care Act (commonly known as Obamacare) went into effect, in 2010, Amar said the blue chip plan saw a big drop in enrollment, after the ACA’s rules mandating certain coverage drove up costs, making it less enticing for small businesses.

“Right now because there are so many bells and whistles in the essential health benefits, employers by and large have stopped offering health insurance,” Amar said. “And you have nothing.”

But making plans more affordable will likely mean they offer worse coverage, critics say, which means consumers, who often aren’t well-versed in the intricacies of health insurance, could be left with insurance that doesn’t cover what they need.

Jeanie Donovan, policy director at the Louisiana Budget Project, also worries the expanded AHPs will mean workers who get federal subsidies to buy individual market plans will no longer have access to those federal dollars if their employer buys into an AHP.

Plus, the AHP expansion would likely draw people from the individual market--which in recent years has seen double digit rate hikes and an increasingly sick population--further destabilizing that pool. 

Insurance Commissioner Jim Donelon said in a statement that Louisiana’s state law requires associations to be in place for longer than five years and to have formed for purposes other than insurance to be eligible to purchase health insurance as a group. That is at odds with the Trump administration rule, which loosened regulations on who can access health insurance through AHPs. Donelon said he will work with his staff and colleagues at the National Association of Insurance Commissioners to review how the new rule could affect Louisianans.

Jeff Drozda, CEO of the Louisiana Association of Health Plans, said if state regulators can still monitor and regulate the plans effectively--especially to make sure they are solvent--the plans could be positive.

“The consumer needs to be aware the benefits are going to be scaled down dramatically,” Drozda said. “For some that may be exactly what they’re looking for in the marketplace. For others it may not.”