Mark and I attended a meeting today from a healthcare leader who is trying to build an Association Health Plan (AHP) for Tennessee small businesses. It became clear very quickly this is not going to be an easy endeavor but it could be a game changer moving forward.
President Trump signed an executive order in 2018 allowing associations to offer heath insurance to its members. Associations cannot be formed just to provide health insurance but this will be a huge benefit if affordable coverage becomes available by grouping many small businesses together. The current rules would allow a sole proprietor to buy group insurance with what we hope will be large group pricing.
While it is a federal law that allows the formation of an Association Health Plan, TN will have its own laws that are overseen by the Tennessee State insurance commissioner. It is not likely we will see insurance sold across state lines because of this. The rules today allow Associations based on companies in related industries or in a common geographical region to offer health insurance on a group basis.
The health plans would not be able to discriminate based on individual health conditions or high claims. This is a really big deal but also makes implementing a plan very difficult because you won't know the risk of the enrollee's until claims start coming in. Health insurance works by the law of large numbers and for an association plan to be successful, they will need strong adoption from the first day.
While association plans are probably still a year or two away, companies with healthy employees are benefiting today with "level funded" health insurance plans. These plans avoid many of the ACA rules and community rates by using a "self insured" platform which allows them to ask health questions and rate groups based on their actual risk. This has saved several of our clients tens of thousands of dollars and given them much more flexibility in designing the health plan that works best for their employees. We would be happy to get pricing for your company if you think your employees are healthier than most.
The good news in all this is carriers, entrepreneurs and some government officials are looking for ways to lower healthcare costs. We will surely see successes and failures but at the end of the day choice and competition will keep rates as low as possible.