The proposed rule grew out of an executive order issued by President Trump last October, and would broaden the type of groups that could form association health plans with the goal of expanding affordable coverage options for small businesses and the self-employed.
ASAE’s comments focus on what types of organizations should qualify as an “employer” for the purposes of establishing an AHP (and who could participate in these AHPs), as well as the complexities associated with state regulation of AHPs. Importantly, the proposed rule released last month would not preempt any current state regulations. Because the laws vary from state to state, AHP formation would be challenging without addressing state regulation, ASAE has said.
“The viability of an AHP will be severely constrained if the AHP must comply with the myriad of differing regulations in each state,” ASAE said in its comments. “While an AHP within a single jurisdiction might be successful, most industries and professions cross many state lines.”
While state preemption is a critical issue, who is eligible to form AHPs and who could join for coverage is another. ASAE has pointed out that the proposed rules assume that the members of an association are employers, when more than half of all associations are professional societies with individual members. “The proposed regulation should be clarified to allow the employers of association members to join the AHP offered by that association,” ASAE said.
ASAE also suggests the administration adopt some additional restrictions on the formation of AHPs by start-up organizations where there is not already a membership nexus. “An association would not risk its reputation and goodwill, and potentially its survival, by offering a thinly capitalized or substandard health plan,” ASAE said. “Without this nexus, a start-up AHP might not be as careful to ensure the success of the plan.”
Because of the complexity of the rules, ASAE also submitted a memorandum prepared by its general counsel firm Pillsbury Winthrop Shaw Pittman LLP which addresses additional technical issues in the proposal.
ASAE is sharing its comments and the technical memo in advance of the March 6, 2018 deadline. Those organizations interested can submit their own comments electronically at www.regulations.gov by referencing the Regulatory Identifier Number RIN 1210-AB85.