A few hours before his campaign rally last night, Donald Trump hosted a roundtable in Duluth, Minnesota, on “protecting American workers.” Much of the event was forgettable, though the president did make an interesting claim about his approach to health care. From the official transcript:
“So we’ve done a real job and we just got association healthcare approved which is going to be incredible. You associate as companies, as people. And you’re going to get great healthcare — highly competitive – at a much lower price than you’ve been paying. It’s all kicking in right now. We actually beat Obamacare.”
What Trump referred to is a newly finalized rule on something called “Association Health Plans” (AHPs), which he’s talked about with varying degrees of coherence for quite a while.
It’s worth revisiting the issue, because the real-world impact of the policy is likely to be pretty significant.
AHPs have actually been around for decades. The original idea was that small businesses and trade associations would pool their resources and offer cheap, thin coverage. The Affordable Care Act raised these plans’ standards, requiring them to cover the same essential benefits as other plans, and imposed strict new safeguards to make sure the plans weren’t ripping people off.
This, naturally, made AHPs more expensive, but it also meant better and more comprehensive coverage for many American consumers and their families.
What the Trump administration has done is roll back the clock.
Jonathan Cohn had a good piece this week, explaining that the new rules empower insurers behind the AHPs to sell worse plans.
The Trump administration and its allies have touted these reforms as a way to help small businesses and individual proprietors who struggle with health care costs today. AHPs will frequently have lower premiums than the plans available today, mainly because they won’t have to cover as much – and because AHPs will be able to use benefit design, along with the ability to vary premiums by age or occupation, to avoid insuring too many older and sicker people.
But that also means that some people who buy these plans will discover, upon getting sick, they don’t have coverage they need. An employee who buys an AHP without mental health coverage, for example, might be happy to save tens or even hundreds of dollars on monthly premiums – until he or she has a child diagnosed with bipolar disorder or schizophrenia and is suddenly paying thousands or even tens of thousands of dollars out of pocket for treatment.
At first blush, the idea may sound like a rather limited problem. If some consumers want to buy bad and/or cheap insurance, that’ll just affect them, right? Wrong. Many in the industry are concerned that younger and healthier people will gravitate to lower-cost, lower-coverage plans because the insurance costs less and these folks aren’t as worried about their health.
But if that happens too much, it leaves insurers offering real coverage plans to consumers with more health problems, which in turn creates a system that’s more expensive for everyone.
It’s why “more than 300 patient and consumer advocates, physician and nurse organizations and trade groups representing hospitals, clinics and health insurers across the country” – many of which are not always on the same page – urged the administration not do this.
Trump did it anyway, convinced that he’s “actually beat Obamacare.” That’s bonkers.