WASHINGTON (CN) – In a move expected to raise premiums under the federal health care law, President Trump cleared the way Tuesday for small businesses to form “skinny” health insurance plans.
Though critics say the skinny plans skirt protections mandated by the Patient Protection and Affordable Care Act, Trump called the move “very comprehensive” Tuesday afternoon during hour-long remarks at the 75th anniversary celebration for the National Federation of Independent Business.
“I’m proud to announce another truly historic step in our efforts to rescue Americans from the Obamacare nightmare and provide high-quality, affordable health care to every American,” Trump said. “This is low-cost, great health care.”
Labor Secretary Alexander Acosta pursued the new rule under the Employment Retirement Income Security Act after President Trump issued an executive order directing him to consider allowing more small employers to form association health plans.
Quoting an estimate from the Congressional Budget Office, the Department of Labor says the new rule will result in 4 million people enrolling in association health plans. The same CBO report also indicates, however, that association plan enrollees are likely to be healthier than those enrolled in plans that comply with the Affordable Care Act.
This is likely to cause a hike of 2 percent to 3 percent in premiums for those left behind in the Affordable Care Act small markets, the CBO found.
Association health plans allow small businesses and self-employed to band together by geography or industry to acquire health insurance coverage at a lower cost. Reports from the Department of Labor, which finalized the new rule Tuesday, say these plans will preserve some consumer protections against premium spikes and coverage denials for those with pre-existing conditions.
Frederick Isasi, the director of nonprofit healthcare advocacy group Families USA, predicts that medical bankruptcies, which declined after passage of the Affordable Care Act, could spike again under the new rule.
Isasi also cautioned that consumers might get duped into buying the cheaper plans only to get stuck with burdensome medical expenses.
“Because association health plans might appear like regular insurance but typically offer narrow coverage, many consumers who buy them will discover that they have astronomically high medical bills for charges they assumed would be covered by their health insurance,” Isasi said in a statement. “For example, what will happen when parents realize their daughter needs to go to the hospital and their health insurance offers no coverage for life-saving care.”
The Department of Labor received more than 900 public comments before implementing the 198-page rule. Even though many of these comments opposed such a change, the rule gives association health plans an exemption from covering essential health benefits like emergency services, maternity care, hospitalization, prescription drugs and mental health services.
“Such a mandate could reduce AHPs’ flexibility to tailor coverage to the particular needs of the members of the group or association offering the benefits, and thereby reduce access to AHPs by making them less attractive options for providing affordable coverage,” the rule says, abbreviating association health plans.
The Department of Labor did not respond to an email seeking comment on the number of public comments the agency received opposed to the lack of an essential health benefits mandate in the rule, and whether some association health plans might still cover such benefits.