Early as­so­ci­a­tion health plans defy fears by of­fer­ing com­pre­hen­sive ben­e­fits

Modern Healthcare - - News - By Shelby Liv­ingston

WHEN THE TRUMP ad­min­is­tra­tion ear­lier this year made it eas­ier for small busi­nesses and self-em­ployed work­ers to band to­gether to buy in­sur­ance that didn’t have to abide by all the Af­ford­able Care Act rules, sup­port­ers of the ACA ex­changes feared the worst.

Would eas­ing re­stric­tions on as­so­ci­a­tion health plans lure healthy peo­ple out of the ACA mar­kets, caus­ing pre­mi­ums to spike for those who re­mained? Would con­sumers be duped into buy­ing skimpier cov­er­age that left them un­pro­tected in a cri­sis?

But most of the early as­so­ci­a­tion health plans be­ing formed or ex­panded un­der the June rule claim to com­ply with ACA man­dates, and say they aren’t charg­ing peo­ple dif­fer­ent pre­mi­ums based on their health con­di­tions or bar­ring peo­ple with pre-ex­ist­ing con­di­tions from en­rolling. Spon­sors of the plans also say they cover each of the es­sen­tial health ben­e­fits, pro­vide broad net­works of doc­tors, and don’t im­pose an­nual or life­time lim­its on cov­er­age.

And de­spite claim­ing to not cut cor­ners, th­ese as­so­ci­a­tion plans are still able to of­fer lower pre­mi­ums than com­pa­ra­ble plans on the in­di­vid­ual in­sur­ance ex­change, the spon­sors say.

In the lat­est ex­am­ple, farmer-owned co­op­er­a­tive Land O’Lakes said its self-in­sured as­so­ci­a­tion plan, which it is ex­pand­ing to farm­ers across state lines un­der the new rule, will cost about 25% to 35% less than ex­change plans in Ne­braska, and 10% to 12% less than com­pa­ra­ble plans in Min­nesota.

Pamela Grove, se­nior di­rec­tor of ben­e­fits for Ar­den Hills, Minn.-based Land O’Lakes, said the plan pri­mar­ily achieves sav­ings be­cause of its size—about

44,000 farm­ers will be el­i­gi­ble in Min­nesota and Ne­braska—not be­cause of any skimp­ing on cov­er­age. The plan started as a pi­lot in Min­nesota.

Land O’Lakes, sev­eral Ne­vada cham­bers of com­merce, and the Na­tional Restau­rant As­so­ci­a­tion have formed as­so­ci­a­tion plans this year and each say they want to do what’s best for small busi­nesses and their work­ers by pro­vid­ing an op­tion that may be a bet­ter fit for a fam­ily than what’s avail­able in the tra­di­tional in­di­vid­ual and small-group mar­kets.

“Crit­ics have done a very good job of mes­sag­ing that as­so­ci­a­tion health plans are go­ing to of­fer skimpy cov­er­age, but the facts to date do not cor­rob­o­rate that claim,” said Chris Con­deluci, a health pol­icy con­sul­tant who worked with Land O’Lakes on its plan. “Th­ese are mem­ber-based or­ga­ni­za­tions, and if they of­fer skimpy cov­er­age, their mem­bers are go­ing to leave and they’re cer­tainly not go­ing to at­tract new mem­bers.”

The La­bor Depart­ment loos­ened re­stric­tions on as­so­ci­a­tion health plans by al­low­ing them to serve more em­ploy­ers and self-em­ployed peo­ple in the same in­dus­try na­tion­wide or in dif­fer­ent pro­fes­sions within the same geo­graphic re­gion as a sin­gle large em­ployer. Pre­vi­ously, as­so­ci­a­tion plans had a hard time meet­ing ERISA’s large-em­ployer in­sur­ance re­quire­ments. The La­bor Depart­ment es­ti­mated that 4 mil­lion peo­ple could be cov­ered un­der as­so­ci­a­tion plans in the com­ing years.

Some health­care ad­vo­cates and ACA sup­port­ers railed against the rule, say­ing it would ex­pand the avail­abil­ity of junk health plans and un­der­mine the ex­changes. Demo­cratic at­tor­neys gen­eral in 11 states and the Dis­trict of Columbia sued in late July to block the rule, and that case is pend­ing. Some state in­sur­ance reg­u­la­tors, such as those in Mas­sachusetts and Cal­i­for­nia, have is­sued emer­gency rules and guid­ance lim­it­ing what as­so­ci­a­tion plans can do within their borders, fear­ing that ac­cess to the plans could desta­bi­lize their mar­kets and lead to fraud and in­sol­ven­cies.

But in a state like Ne­braska where choice on the ACA ex­change is lack­ing and pre­mi­ums have soared, reg­u­la­tors wel­come the chance to bring in new com­pe­ti­tion. Med­ica is the only in­surer of­fer­ing cov­er­age on the ACA ex­change. The aver­age monthly in­di­vid­ual premium for the sec­ond-low­est cost sil­ver plan is ris­ing 9.1% to $686 be­fore sub­si­dies in 2019 com­pared with 2018, ac­cord­ing HHS data.

Bruce Ramge, Ne­braska’s in­sur­ance di­rec­tor, said the Land O’Lakes as­so­ci­a­tion plan “will of­fer an­other re­ally good choice for in­di­vid­u­als who ei­ther don’t re­ceive a sub­sidy and can­not af­ford cov­er­age on the ex­change or for some rea­son pre­fer not to pur­chase that cov­er­age.”

Rec­og­niz­ing that Land O’Lakes was “one of the good play­ers,” Grove said the state “bent over back­wards to help us get it out and ap­proved as soon as pos­si­ble.”

Laura Arp, Ne­braska’s life and health

ad­min­is­tra­tor, said the plans look a lot like what’s of­fered on the ACA ex­change.

Mod­ern Health­care re­viewed the plan doc­u­ments for Land O’Lakes’ eight Ne­braska plans, in­clud­ing a plat­inum-level plan, one gold plan, and three sil­ver and three bronze op­tions. They fea­ture a range of de­ductibles and ap­pear to pro­vide cov­er­age for each cat­e­gory of es­sen­tial health ben­e­fits in­clud­ing pre­scrip­tion drugs, ma­ter­nity care and men­tal health and sub­stance abuse treat­ment. Land O’Lakes leases its net­work from Cigna Corp. in Ne­braska and Pre­ferredOne in Min­nesota.

Med­ica is also of­fer­ing an as­so­ci­a­tion plan with the Ne­braska Farm Bureau in 2019 with aver­age pre­mi­ums about 25% less than a com­pa­ra­ble in­di­vid­ual ex­change plan, said Ge­off Bartsch, vice pres­i­dent of Med­ica’s in­di­vid­ual and fam­ily busi­ness. Like the Land O’Lakes plan, Med­ica’s farm bureau in­sur­ance will cover all the es­sen­tial health ben­e­fits and will not charge more for or ex­clude those with pre-ex­ist­ing condi- tions, he said.

Med­ica is able to of­fer lower pre­mi­ums be­cause the group of po­ten­tial farm bureau mem­bers is rel­a­tively health­ier than the in­di­vid­ual mar­ket. That said, Bartsch also ex­plained that the plan will set pre­mi­ums based on age, lo­ca­tion and in­dus­try, and is con­sid­er­ing vary­ing rates based on gen­der in the fu­ture, which will also al­low some sav­ings. ACA ex­change plans are pro­hib­ited from vary­ing rates based on in­dus­try and gen­der, but the La­bor Depart­ment rule al­lows it.

In Ne­vada, a fully in­sured as­so­ci­a­tion health plan of­fered by sev­eral cham­bers of com­merce of­fers HMO pre­mi­ums at up to 15% to 20% less than com­pa­ra­ble ex­change plans, de­spite of­fer­ing ro­bust ben­e­fits, be­cause its part­ner Unit­edHealth­care will at­tract enough vol­ume to com­mand lower rates, said Scott Muel­rath, CEO of the Hen­der­son Cham­ber of Com­merce. Still, the plan will vary rates based on age, oc­cu­pa­tion, lo­ca­tion and group size.

Aaron Fra­zier, di­rec­tor of health­care pol­icy at the Na­tional Restau­rant As­so­ci­a­tion, sim­i­larly said mem­bers will see lower pre­mi­ums be­cause of the com­bined pur­chas­ing power of its small busi­nesses.

In ad­di­tion to size, Land O’Lakes’ self-in­sured sta­tus will also help fetch sav­ings. Be­ing self­in­sured means it will avoid cer­tain state premium taxes, and it won’t have to pay a “risk load” or profit mar­gin to a health in­sur­ance car­rier, Con­deluci ex­plained. The plan also will vary rates

Crit­ics of as­so­ci­a­tion plans worry they will lure healthy in­di­vid­u­als away from the ACA-com­pli­ant mar­kets, caus­ing pre­mi­ums to spike for those left be­hind.

based on ZIP code and age, lead­ing older mem­bers to pay as much as four times what younger mem­bers pay. ACA ex­change plans are lim­ited to charg­ing older pa­tients three times more.

In­sur­ance ex­perts said those ex­pla­na­tions make sense. “AHPs can of­fer com­pre­hen­sive cov­er­age and still be cheaper than mar­ket­place plans if they ei­ther serve a pop­u­la­tion that is less costly than the aver­age of the mar­ket­place and/or they some­how are able to pay less for ser­vices,” said Kather­ine Hemp­stead, who di­rects the Robert Wood John­son Foun­da­tion’s work on health in­sur­ance cov­er­age.

The Trump ad­min­is­tra­tion rule did leave the door open for some plan spon­sors to skimp on cov­er­age. And it is pos­si­ble that some could claim to cover the 10 cat­e­gories of es­sen­tial health ben­e­fits, yet still not meet fed­eral stan­dards, said Sab­rina Cor­lette, health in­sur­ance ex­pert at George­town Univer­sity.

Crit­ics of as­so­ci­a­tion plans also worry they will lure healthy in­di­vid­u­als away from the ACA-com­pli­ant mar­kets, caus­ing pre­mi­ums to spike for those left be­hind. But Land O’Lakes and the Ne­braska In­sur­ance Depart­ment re­jected those con­cerns. Ramge, the Ne­braska in­sur­ance di­rec­tor, said most of the peo­ple with ACA cov­er­age re­ceive some type of sub­sidy; the as­so­ci­a­tion plans will at­tract those who don’t qual­ify for fed­eral fi­nan­cial as­sis­tance.

And since the plan is not charg­ing pre­mi­ums based on health sta­tus, Land O’Lakes’ plan gives all farm­ers— healthy and sick—an­other op­tion, Grove said.

“If there’s only one op­tion out there for them right now, and it isn’t fea­si­ble, then this be­comes their vi­able op­tion,” she added. “And I like com­pe­ti­tion. It drives us to en­sure that we con­tinue to of­fer good cov­er­age at af­ford­able prices and of­fer good cus­tomer ser­vices and some tools and ed­u­ca­tion for those em­ploy­ees, be­cause a lot of them are not health­care-savvy. They are look­ing for peo­ple they can trust, and luck­ily they

● trust Land O’Lakes.”

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