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Less-costly health insurance plans stalled in Pa.

The Trump Administration’s plan to extend association health plans to individuals and small employers has largely stalled going into the open-enrollment season, if not beyond, at least in Pennsylvania.

Several observers said their efforts to build association health plans were brought to a stop for several reasons, including Pennsylvania’s role in lawsuits challenging the federal decision to expand the plans, seen as a lower-cost alternative to plans offered under the aegis of the Affordable Care Act, or ACA.

Association health plans can cover some or all employers in a state, city, county or a multi-state metro area, or they can cover businesses in a trade or industry group nationwide. The plans, however, do not have to comply with all of the ACA’s requirements.

Carl Seitz, president of the Lehigh Valley Business Coalition on Health Care, said his group began working on efforts to extend association health plans to small employers soon after the initial federal rules were released early in the summer. His group, which extends beyond the Lehigh Valley and into the Reading area, has for years helped coordinate plans for large, self-insured employers who form pools so they can gain more negotiating power – and thereby lower rates – for health insurance.

Many smaller businesses and sole-proprietors were interested in similar opportunities after the federal Department of Labor opened up the plans to them, he said.

“We were putting a lot of work into it,” he said. “It’s now on hold.”

Seitz said that Pennsylvania regulators determined that individuals or sole proprietors without employees would not be allowed to join newly formed insurance pools, further undermining the attractiveness to create a plan.

In August, state Insurance Commissioner Jessica Altman noted that while the new rules were from the federal government, the state retained regulatory authority over association health plans. In addition to not allowing individuals to join the plans, Altman determined that they could only be created by associations that have been operating for two years.

Ron Ruman, communications director for the state insurance department, said that excluding sole proprietors was not intended to derail association health plans in Pennsylvania but to ensure that state residents remained fully protected. 

“The rules that were in place will stay in place,” he said.

In a written statement in August, Altman noted that it was important to her and Gov. Tom Wolf that Pennsylvania regulate all association health plans.

“Consumers here will continue to receive the strong protections Governor Wolf and I believe are vital to make sure health insurance provides the coverage Pennsylvanians need and deserve, such as essential health benefits and prescription drug coverage,” she said at the time.

Meanwhile, attorneys general in Pennsylvania and 11 other states argued in July that the expansion of association health plans is an attempt by the Trump Administration to undermine the ACA, otherwise known as Obamacare. They are concerned that healthy people will leave ACA plans – thereby undermining their affordability – to join potentially less-expensive association plans.

“The Affordable Care Act is the law, and I’m acting to enforce the law and ensure that Pennsylvanians and Americans can continue relying on it for safe, affordable health care for themselves and their families,” Attorney General Shapiro said in a written statement at the time. “Just because the Trump administration doesn’t like Obamacare does not give them the right to undermine the law.”

Seitz and others noted that it might be until at least next year or beyond before there is a resolution to the lawsuits and clearer guidance is available.

Frank Ebner, vice president and principal of McConkey Insurance and Benefits in York, said his company also was building plans for smaller companies and stopped after the recent developments. Once it was determined that individuals would not be able to join an association health plan, much of the impetus to create a pool was gone, he said.

“I don’t see this, obviously, in 2018 or even 2019,” Ebner said. “We are in a wait-and-see mode.”

As far as the current open-enrollment season, the trends toward high-deductible plans, health-savings accounts and wellness goals will continue, said Ebner and Dave Repshas, McConkey’s director of benefits management. Most large companies will start open-enrollment this month, with many midsized and smaller companies gearing up to offer plans to workers later in the fall, they said.

Repshas said many clients who haven’t shopped for new insurance in a while are starting to look at options this year. And a tight labor market is making health insurance more important as a way to attract workers, Ebner said.

A survey last month by Mercer projects that health benefit costs per employee will rise nationwide by 4.1 percent on average in 2019, according to a news release from Mercer.

Ebner said central Pennsylvania can expect about 8 percent growth, noting that his projections are not an apples-to-apples comparison with Mercer’s. McConkey reached the 8 percent figure after weighing local factors driving health care costs in the region.

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