President Trump is expected to issue an executive order today that will make sweeping changes to the country’s system of health insurance coverage and begin the unwinding of the ACA. The action is a result of the inability of GOP members of Congress to begin dismantling Obamacare. Trump has been vocal about his displeasure at this non-turn of events. The executive order is expected to allow the Labor Department to aid small businesses, and even individuals, purchase coverage through association health plans (AHPs). “These insurance plans would be exempt from some regulations, such as the requirement that they offer a specific set of benefits and they would likely attract those with limited health needs,” the Wall Street Journal reports. Pros and cons? Supporters say they cost less since they wouldn’t be as regulated. Critics say that beneficiaries would suffer if they wind up with conditions that aren’t covered. AHPs have been around, and actually exist today as state-regulated, multiple-employer welfare arrangements, or MEWAs (pronounced mee-wahs). An AHP is a MEWA that’s tied into a trade association or similar group, like a Chamber of Commerce. States typically require MEWAs to have a minimum number of employers and covered employees to qualify, and some kind of commonality among employer members; that is, they should all be in the same region or a similar industry. There aren’t many MEWAs. In the two biggest states, California and Texas, 10 MEWAs are functioning today.
Business groups like the U.S. Chamber of Commerce and the National Federation of Independent Business (NFIB) endorse AHPs as a way to give employers more options beyond the strictures of the ACA. “Our members are clamoring for more affordable options for offering their employees health insurance,” says Kevin Kuhlman, government relations director for NFIB, a trade association for small businesses.
The National Association of Insurance Commissioners is against AHPs, claiming states need to regulate these plans to avoid their sins of the past, which, critics point out, include fraud and poor management. In the states, MEWAs are subject to some robust regulations. Texas is known to have extensive MEWA regulations. MEWAs there must have at least five separate employers, cover at least 200 employees, maintain stop-loss coverage, and have cash reserves of 20% of the total estimated contributions for the current plan year.
One of the largest MEWAs is Western Growers Assurance Trust, a health plan based in California that covers 70,000 enrolled lives and has $225 million in annual revenue. It offers health benefits to members of the Western Growers Association, an association of farmers and agriculture-related industries that covers four states. It is subjected to California regulation.
Despite the ERISA changes in the 1980s, confusion over regulation of MEWAs was rampant. A 2005 Georgetown University report—compiled in response to the 2005 legislative effort to exempt these entities from state oversight—noted that state regulators shut down 41 illegal entities selling coverage through phony and real associations, and the Department of Labor shut down three others. “During a recent cycle of scams, 144 operators left over 200,000 policyholders with over $252 million in medical bills,” the report states.
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