What is the Future of Association Health Plans?

On June 19, 2018, the U.S. Department of Labor expanded access to affordable health coverage options for America’s small businesses and their employees through Association Health Plans.

Association Health Plans (AHPs) work by allowing small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage as if they were a single large employer. AHPs are also to be able to strengthen negotiating power with providers from larger risk pools and greater economies of scale. 

The Trump administration jumped on AHPs as one of its main parts of its health policy agenda by significantly expanding their reach, but a federal court decision made in March 2019 has found the new rules violate federal tax law.

On November 14, 2019, a three-judge panel of the Court of Appeals for the District of Columbia Circuit (D.C. Circuit) heard oral argument in an argument over the validity of a regulation to expand access to AHPs.

Twelve Democratic attorneys general challenged the rule as unlawful, and a federal district court judge in the District of Columbia set aside major parts of the rule in March 2019.

The D.C. Circuit could reverse or affirm the lower court’s decision. Reversal would mean that invalidated portions of the final rule would be reinstated, and AHPs formed under the rule could resume marketing and enrollment of new members. If the D.C. Circuit affirms the lower court’s decision, much of the final rule would remain invalidated.

In either instance, the losing party could ask for a review by a full panel of judges on the D.C. Circuit or ask the Supreme Court to hear their appeal.

About 30,000 Americans may lose coverage from AHPs next year, as Democratic-led states seek to block Trump administration regulations seeking to give people cheaper options. 

AHPs have been become a political football as Democrats consider the health plans to be “junk” insurance that may deceive consumers by cutting corners on coverage. Democrats have moved to ban AHPs in their states.

In a way the position taken by the Democrats could be compared to Republican-led states to block Medicaid expansion in their states. However, there are some differences by both parties as to how that logic is applied at the individual or business level and the different consequences that can occur in the real versus political world. 

AHPs are not new but are have been newly defined to allow for their expanded use. Junk plans are a political term applied to an insurance plan that may be deemed not in-line with the political world or a select philosophy.

Takeaway: AHPs have been become a political football as their value needs to be determined by who is paying for the type of coverage