On Thursday, the administration announced it would “promote health care choice and competition” by putting into motion efforts that will impact the private health insurance market. The executive order directs federal agencies to loosen restrictions on association health plans as well as employer contributions towards health reimbursement accounts.
Currently, association health plans (AHPs) are governed by the same rules, regulations, and consumer protections as individual and small-group health insurance plans sold under the Affordable Care Act and can only be sold in a given state. The new executive order would essentially allow AHPs to be sold across state lines and under rules that are applicable to the large-group market, which comes with a different set of rules, regulations, and not as many consumer protections including the provision of essential health benefits. Critics believe this executive order will water down the existing risk pool by allowing healthier consumers to purchase bare bones coverage across state lines, leaving sicker, costlier consumers in the current marketplace risk pool. For more information about AHPs, read this post from The Commonwealth Fund. In previous federal analysis of a similar health plan model, known as Multiple Employer Welfare Arrangements (MEWAs), MEWAs did not live up to their promise—leaving thousands of consumers with unpaid claims.
In addition, the executive order, calls on federal agencies to expand the use of employer contributions towards health reimbursement accounts, which would allow for the purchase of health coverage that does not meet ACA rules.
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