Perhaps you remember those policies that were offered to you as a member of a local business or social group or trade association.
The policies were usually marketed as “affordable” — whatever that meant in those days. Sometimes, though, certain kinds of organizations that offered association insurance became insolvent or engaged in fraudulent activities and left policyholders with few options.
When the Affordable Care Act came along, association policies had to conform to the new Obamacare rules. For one thing, they could no longer consider gender when setting the price of a policy. In the old days insurers could charge women more because they said they were more likely than men to file claims.
The ACA also outlawed occupational underwriting: that is, considering a person’s job in deciding to issue a policy.
Last year, however, the Trump Administration changed the rules to allow more employer groups and associations based on common industries or geography to offer health insurance plans. The goal is to provide a cheaper option than an ACA policy, at least for some people.
According to Kevin Coleman who has founded associationhealthplans.com to provide facts and figures about the new market, 28 plans are now being offered in 13 states. Coleman says if there are 50 in 16 states by the end of the year, he would consider that a successful result.
Time will tell in the next few years whether the updated versions of association health insurance will actually have solved the problems the old ones presented and, indeed, offer policyholders a cheaper option.
Coleman says so far plan sponsors claim they typically pay between 23 and 29 percent less to cover those insured than before.
How do sponsors achieve the savings they are claiming?
The new association plans don’t have to offer the same benefits as Obamacare plans. Coleman says he is finding while many plans do offer mental health coverage like the ACA policies, they do not cover pediatric dental and vision services that you would find in an ACA plan.
While ACA plans can use only a few of the so-called rating factors like smoking, age and where a person applying for coverage lives, association plans have much more leeway. They can use occupation in determining whether to insure someone and, ultimately, what a policy costs.
If an insurer doesn’t want to insure rodeo performers, for instance, they can refuse to insure them.
By excluding certain people who are likely to generate lots of claims — like ballet dancers or young women who have babies — the sponsor can save money and, theoretically, pass the savings on to policyholders.
One of the things Coleman found in his survey is the deductibles are still very high. As an example, Coleman noted in one plan deductibles ranged from $4,500 to $10,000 for a family plan and from $1,500 to $5,000 for individual coverage. That’s the amount of medical bills the insured person will have to pay in a year before the insurance even kicks in.
A shopper might expect to find those kinds of deductibles in many of the Affordable Care Act policies and in other individual market insurance.
Remember, it’s the interplay among four factors that determines how much your health insurance really costs: the deductible; coinsurance, the percentage of the price of a medical service you pay yourself; copayment, a flat amount you pay for a service; and the premium. Too often people look only at the premium.
Sellers of the newly fashioned association policies also have more opportunity to charge higher premiums for some people, says Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.
Federal law does not prohibit using age as a factor in determining premiums, although some state laws might.
“Promoting easy fixes is creating new winners and losers without addressing the real problem,” Corlette says. “I caution policymakers there’s no magic bullet to affordability. AHPs do nothing to tackle the core problem of hospital costs, doctor and drug costs. The price of health care is too damn high.”
What has been your experience in choosing health insurance for this year? Write to Trudy at [email protected].
Trudy Lieberman, a journalist for more than 40 years, is a contributing editor to the Columbia Journalism Review. Send comments to [email protected].