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Rand Paul–Endorsed 'Association Health Plans' Go Into Effect

The Congressional Budget Office believes the plans can lead to 400,000 currently uninsured getting medical coverage.

Sen. Rand Paul (R-Ky.) is happy today that what he calls his "months" of work with President Trump and Secretary of Labor R. Alexander Acosta have led to finalizing rules for expanding the availability of Association Heath Plans (AHP). Paul calls AHPs a "pro-patient, pro-worker, and pro-family solution" and "one of the most significant free market health care reforms in a generation."

Ron Sachs/SIPA/NewscomRon Sachs/SIPA/Newscom

The Labor Department's announcement sums up what problems AHPs are meant to solve and how they are meant to work:

The percentage of small businesses offering healthcare coverage has been dropping substantially. For the self-employed, the individual market exchanges do not offer affordable coverage either; premiums more than doubled between 2013 and 2017 with deductibles increasing even more.

This reform allows small employers – many of whom are facing much higher premiums and fewer coverage options as a result of Obamacare – a greater ability to join together and gain many of the regulatory advantages enjoyed by large employers.

Under the Department's new rule, AHPs can serve employers in a city, county, state, or a multi-state metropolitan area, or a particular industry nationwide. Sole proprietors as well as their families will be permitted to join such plans...These plans will also be able to reduce administrative costs and strengthen negotiating power with providers from larger risk pools and greater economies of scale....

The Congressional Budget Office (CBO) estimates that millions of people will switch their coverage to more affordable and more flexible AHP plans and save thousands of dollars in premiums. CBO also estimates that 400,000 previously uninsured people will gain coverage under AHPs.

The Washington Post, reporting today on the new rules, notes that this Trump administration action will "allow plans to exclude coverage for maternity care, prescription drugs, mental-health services and other 'essential health benefits' the ACA requires of coverage sold to ­individuals and small businesses...Congressional Democrats and critics across the health-care industry say the availability of cheaper, skimpier coverage will leave some patients stranded when they get sick."

The AHPs will be "phased in for coverage sold from September to April" and "may not charge more or refuse to cover customers with preexisting medical conditions...But the plans will have more freedom to charge different prices depending on customers' ages, genders and locations — something ACA coverage cannot do."

AHPs have already existed, but the new rules will "substantially expand the circumstances under which association health plans can be created and purchased. The regulations erase a requirement that any association must already have existed for a purpose unrelated to health insurance. And for the first time, individuals will be able to buy one of the plans."

Michael Cannon at the Cato Institute doesn't love the AHP idea traditionally, since as designed initially the concept "violates Republicans' federalist principles, because they would move health-insurance regulation from the state level to the federal level. But since ObamaCare went ahead and federalized regulation of small-business health plans, and the association-health-plans rule merely allows small businesses to opt for lighter versus heavier federal regulation, association health plans no longer violate federalism. Credit ObamaCare with making a bad idea good."

But still not all that good an idea, Cannon thinks, since "Trump's association health plans rule builds on the broken model of employer-sponsored health insurance." That model in general, Cannon complains, "deprives workers of control of their health-insurance dollars and decisions. It sticks millions of workers with health plans they would never choose themselves. It leaves millions of workers with uninsurable preexisting conditions, because it disappears for no good reason after workers get sick. It increases prices for health care and health insurance."

Thus, whatever benefits on the margin for some small businesses might result, the new AHP plan "does nothing to move Americans toward a better system of providing health insurance." Cannon grants that the plans will create incentives for some of the healthy to leave the current ObamaCare insurance exchanges, likely causing those premiums to rise even more. While ObamaCare fans call this sabotage, Cannon writes, it's really merely accurately and factually reflecting the actual costs of ObamaCare.

Peter Suderman has reported for Reason on earlier steps in the process of bringing AHPs to law.

Full text of the final rule.

Photo Credit: Ron Sachs/SIPA/Newscom

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  • AlmightyJB||

  • Microaggressor||

    While ObamaCare fans call this sabotage

    Rand Paul, Arch Wrecker and Kulak Whisperer

  • Hugh Akston||

    "violates Republicans' federalist principles,

    I'm just glad that Republicans' limited government, free market, and family values principles remain intact so we can all continue to take them seriously as a political party.

  • John||

    Principles demand that Republicans let progressives win. Right Hugh?

  • Rat on a train||

    Keep reading
    But since ObamaCare went ahead and federalized regulation of small-business health plans, and the association-health-plans rule merely allows small businesses to opt for lighter versus heavier federal regulation, association health plans no longer violate federalism.

  • BYODB||

    Exactly this. What violated federalism already happened, and is now considered the purview of the FedGov. If not for that, what they're doing now would certainly be a problem.

    It would be nice if Republicans actually repealed such a destructive notion as nationalized healthcare, but clearly that isn't in the cards because it would feel bad, man.

  • EscherEnigma||

    Republicans are in control of the House, the Senate, and the Presidency. If the ACA is "forcing" them to make decisions that violate their principles, they should change the ACA.

    So stated preferences and revealed preferences and all that jazz.

  • Rat on a train||

    Unlike the Democrats, the Republicans haven't had a filibuster proof majority to ram through legislation.

  • The Last American Hero||

    Then try, and make Team Blue get up and defend the shitshow.

  • John||

    1000 people injured or killed by terrorist attacks by refugees

    http://freebeacon.com/national.....-refugees/

    Reason spilled endless amounts of ink demanding Europe take these refugees but doesn't say a word about the resulting carnage.

  • Devastator||

    freebeacon.com - lol

  • Chereth Cutestory maritime aty||

    Ok, now that you got the snark out of,the way, can you actually dispute the veracity of the article?

  • KevinP||

    Do you have any actual facts in rebuttal? And I know that you haven't actually read the article anyway. Ask me how.

  • Hunthjof||

    "The Washington Post, reporting today on the new rules, notes that this Trump administration action will "allow plans to exclude coverage for maternity care, prescription drugs, mental-health services and other 'essential health benefits' the ACA requires of coverage sold to ­individuals and small businesses...Congressional Democrats and critics across the health-care industry say the availability of cheaper, skimpier coverage will leave some patients stranded when they get sick."
    The AHPs will be "phased in for coverage sold from September to April" and "may not charge more or refuse to cover customers with preexisting medical conditions...But the plans will have more freedom to charge different prices depending on customers' ages, genders and locations — something ACA coverage cannot do."

    What you mean people will be able to get coverage tailored to them instead of what some schmuck in DC thinks they need? How dare they do that. Next you might tell me people might try to spend their money as they see fit instead of how the DC establishment says. This must be stopped.

  • Jerryskids||

    I like that full text of the final rule - 198 pages of free market win.

    Obama won, the principle of socialized healthcare is firmly entrenched.

  • Chereth Cutestory maritime aty||

    Until it can be dug up.

  • sarcasmic||

    Obama Johnson won, the principle of socialized healthcare is firmly entrenched.

    Your observation is over fifty years too late.

  • Just Say'n||

    We should also remember that Rand is basically a Nazi for not supporting open borders, which our totally not progressive commentators have insisted is what Hitler did or some nonsense

  • Hugh Akston||

    Your link is broken.

  • Chipper Morning Baculum||

    Just follow his link to how this Trump administration policy has been in place for 10 years.

  • Sevo||

    "Just follow his link to how this Trump administration policy has been in place for 10 years."

    Just watch CMB shove his foot in his mouth:
    "Obama's Immigration Agencies Separated Children From Their Families, Too"
    [...]
    "The Trump administration has an intentional and explicit policy of separating migrant children from their families if caught crossing the U.S.-Mexico border without permission. Long before that, however, the administration of Barack Obama ramped up a program with a sometimes similar effect.
    Since 2008, the United States has had a policy known as the Alien Transfer Exit Program (ATEP), or Lateral Repatriation. This program focuses on detaining male migrants of Mexican descent."
    https://lawandcrime.com/immigration/obamas-
    immigration-agencies-separated-
    children-from-their-families-too-2/

    Are you stupid, or hoping we'll be too stupid to notice, dimwit?

  • The Last American Hero||

    Which is silly because Hitler tried to expand his borders to include just about everyone.

  • DajjaI||

    Thank you Rand Paul. This will further undermine ACA and universal healthcare, which is really just healthcare for bullies. Sure rich people can fly to Mexico, but everyone else (who doesn't have the right connections) will get screwed. The fact is, people don't want government healthcare, despite a few activists who scream for Bernie at rallies, and they would gladly pay for it if it was more affordable. Which it would be if the government would stop inflating the cost.

  • Hunthjof||

    Well in all likelihood they won't need to cause they will get the prime care. Military medicine is a shinning example of that. If people honestly think that a Third Class Petty Officer and his or her family gets the same level of care in the same timely manner as an Admiral you are kidding yourself.

  • Iheartskeet||

    Of all people, Anne Coulter proposed something smart a year or so ago. Keep stupid Obamacare, whatever, but also just pass a law that says "hey its now legal to sell any kind of health insurance you want in the free market".

    If only...

    I welcome these AHPs, its true they don't go far enough. Its amazing to price out plans that are truly outside of Obamacare, that don't allow pre-existing conditions, etc etc. I priced out "insurance" through Medishare, which is exempt from Obamacare mandates through some kind of religious loophole, and it was 50% to 75% LESS than my Obamacare options, with vastly lower (~70% to 80%) deductibles.

    THATS what we need to allow, and allow it without having to ascribe to statements of faith etc. to be in it.

  • vek||

    I could become religious for those kinds of savings...

  • JFree||

    builds on the broken model of employer-sponsored health insurance.

    Amen! We've been stuck with the problems of that model for 70 years and STILL can't even be honest about that.

  • Longtobefree||

    Too old to read a couple hundred pages of BS. Does the fix make the feds get into the same programs as the plebes?

  • nicmart||

    Another fiddle that is not even a baby step toward a free market in medicine.

  • Incomprehensible Bitching||

    Hmmmmmmm! Heath care reform! I love me some health care reform!

  • I'm Not Sure||

    "Congressional Democrats and critics across the health-care industry say the availability of cheaper, skimpier coverage will leave some patients stranded when they get sick."

    Congressional Democrats and critics across the health-care industry say some patients are too stupid to make decisions for themselves, so Smart People like us will do that for them.

    Fixed it, I did. :-)

  • nicmart||

    The socialization of health care in the United States is, for all practical purposes, a fait accompli. However, that reality has been obscured by the absence of a directly nationalized ("socialized") system of health care, as well as by the American system being decked out with the vocabulary of choice, market competition, and patient autonomy. The result is deeply ironic: the more thoroughly socialized our health care system becomes, the more physicians and patients alike complain that its shortcomings lie in its capitalistic excesses. — Thomas Szasz, 2001

  • DenverJ||

    I swear. I keep offering that, if you all would just elect me King of the World for two years, I could get all this shit straightened out. But nooooo, y'all never elect me King of the World, and shit never gets fixed.

  • vek||

    Tell it brother! I think the same thing sometimes... The weird/funny thing is that a handful of times in history dictators, mostly monarchs, basically did do that. They're not all bad after all. Unfortunately the good ones are too far and few between to base systems of government off of the Right Top Man model :( I'd love to have a dictator who enforced strict libertarianism! LOL

  • chemjeff radical individualist||

    Well at least it is a small step in the right direction.

  • vek||

    Sweet! As a self employed small business owner, I may have to look into some of these things once they get rolling. I imagine HSAs will still be better for me, but worth checking anyway just to be sure.

  • BYODB||


    The AHPs will be "phased in for coverage sold from September to April" and "may not charge more or refuse to cover customers with preexisting medical conditions...But the plans will have more freedom to charge different prices depending on customers' ages, genders and locations — something ACA coverage cannot do."


    So, a failure waiting to happen then. Paul should know this.


    Cannon thinks, since "Trump's association health plans rule builds on the broken model of employer-sponsored health insurance."


    And he's not wrong.

  • The Last American Hero||

    Baby steps.

  • EscherEnigma||

    [...] a greater ability to join together and gain many of the regulatory advantages enjoyed by large employers.


    Eh, not just regulatory advantages. Quite simply, an individual is never going to have enough leverage over an insurer to be able to get them to change their policies. You really do need a group that has "joined together" to have leverage over insurers.

    Which is, of course, the problem. If your market doesn't work for individuals, but only for groups, then no "free market" approach can work. But so far no one has been able to come up with a scheme that empowers individuals to the level of groups.

  • BYODB||


    But so far no one has been able to come up with a scheme that empowers individuals to the level of groups.

    Well, other than simply paying out of pocket for services rendered but I'm told that approach is somehow crazy.

    Nevermind that the vast majority of growth of expenses in the medical industry is administrative to deal with all the laws being passed, of course. I'm sure hiring thousands of regulatory experts costs no money.

    Not saying you're an idiot here or anything, it's just frustrating to see people pretend like payment for services rendered is somehow an insane notion. Yes, costs are going up but it's not because of technology improvements or innovation that improves care. At least not solely or primarily, that is.

  • EscherEnigma||

    Even if that is part of the solution†, it doesn't address my raised concern which is the lack of individual empowerment over the industry.

    To put it simply, a hundred customers individually lodging the same complaint will never have the same persuassive power as a hundred customers signing onto a single petition with the same complaint. There's a reason companies have always hated unions and class-action lawsuits. There's strength in a crowd that an individual will never have.

    Not saying you're an idiot here or anything [...]


    Eh, y'all have called me far worse then that.
    ________
    †I'm skeptical. The last time "pay as you go" was a common model the average lifespan was 60 something and young folks with serious illnesses were either rich or dead. Current practices, such as spending hundreds of thousands to save a pre-mature baby or hundreds of thousands to keep grandma alive another couple of years, were unthinkable for the vast majority of Americans.

  • BYODB||


    Even if that is part of the solution†, it doesn't address my raised concern which is the lack of individual empowerment over the industry.

    It directly addresses it, since it would necessarily mean abolishing the insurance market as it existed even prior to the ACA.

  • EscherEnigma||

    Shifting from dickering with the insurer to dickering with the hospital is a side-step, not a step-up.

  • vek||

    1. You're not seeing how it worked in the past correctly.

    People paid out of pocket for their annual checkup, or to deal with an ear infection. Most people had catastrophic insurance still. This model worked great then, and it works great now for people with HSAs, and would work great for more people if it became common.

    This improves price transparency because people actually know what things cost, and if they have to pay out of pocket for small things they will shop around to find a good provider. They will also skip all the countless useless procedures people often do. Some people I know go to the doctor SO MUCH for pointless things it blows my mind. I never went to a doctor for anything in over a decade until last year. At most doing a checkup or two in that decade + might have been reasonable. My last girlfriend would go over runny noses that went over a couple days and stupid shit like that. That waste would stop if she and everybody else had to duff up the full hundred and something bucks to see a doctor.

    As for grandma dying and pre mature babies... People could cover that with catastrophic insurance, OR choose not to and face the risks. That's freedom baby! There's no reason that can't be optional in a pay as you go for small stuff + catastrophic plan program.

  • The Last American Hero||

    Um, it works just fine for home and auto insurance. Especially auto.

  • John B. Egan||

    "This reform allows small employers – many of whom are facing much higher premiums and fewer coverage options as a result of Obamacare .. " .. Obamacare kept the lid on rate increases. It did not cause them to rise. Why do RW rags keep posting this BS? How are we supposed to fix a problem if all we have is a constant spew of lies?

    No, Obamacare Hasn't Jacked Up Your Company's Insurance Rates : Forbes

    As to Rand Paul patting himself on the back for 'potentially' covering 400,000, remember that there are 44 million people in this country with no health insurance, and another 38 million with inadequate health insurance. This means that nearly one-third of Americans. His penny-ante 400,000 is just spit in the ocean. Why would he or his daddy fix the system that made them both wealthy anyway?

    In essence, Trump and the GOP destroyed what little hope we had that Obamacare would become a Single Payer system and actually save out nation 1/2 the $2.3 Trillion we spend each year. But that's what happens when your government is for sale to the highest bidders.. and the GOP sold out 235 million citizens to the Koch Brothers. MAGA! BeBest!

    Koch network 'piggy banks' closed until Republicans pass health and tax reform | US news | The Guardian

  • The Last American Hero||

    I give it a 5/10. It was a strong start ignoring the rising insurance premiums, but the Koch-hate gave it away. Gotta go sparingly on that if you want people to think the post is real.

  • vek||

    Soooo you're saying that all those people whose insurance premiums went up IMMEDIATELY after Obamacare got passed are liars?

    You do realize how the whole scheme works right? You force people who already pay to pay more into the system, so that you can then subsidize those without coverage... The people who had no insurance before are coming out ahead, but all the other people are now being forced to pay more.

    That is LITERALLY the corner stone of how the whole thing works. You sure must be dense!

  • KevinP||

    In the year before Obamacare took effect, our annual premiums were $2,400 for my wife and I.

    Last year, they went up to $11,000.

    But what do I know, I must be just a right wing rag.

  • RenaD||

    Fuck these jokers.

    Insurance as it stands is not a hedge against disaster, its an unnecessary money suck of epic proportions. And any attempt to legitimize the industry and ensure everyone is "covered" by playing whack-mole-with legislation is unacceptable and unethical.

    I work for myself. Pre-Obummercare, I had a perfectly serviceable $90-a-month catastrophic policy to cover the big stuff. Everything else, I paid out of pocket, no problem.

    Now, I pay $500 a month for a policy that I effectively can't use, because it has a deductible of $11,500, and I can't seem to find any docs who accept it. I recently had to see a urologist for a potential problem, but there wasn't a single specialist in my city that took my insurance who had an appt. available before October.

    So I went out of network and paid $145 cash for an office visit with a urologist who got me in the following week. Turns out I needed a cat scan and another simple procedure to rule out kidney problems and/or cancer. I negotiated the price of the CT scan down to $1,200, a SEVENTH of what the doc would have charged my insurance. The other procedure was $250.

    Had I actually gone through my insurance, my obligation for both procedures would have been greater than what I paid cash for.

    And this isn't just me. Everyone I know is having similar experiences.

  • RenaD||

    "whack-a-mole with legislation"—Jesus can we get an edit button?

  • vek||

    Yup. I'm self employed too, and have seen the same.

    As far as things go man you should really look into doing an HSA. You're still allowed to do catastrophic only insurance through them, and pay out of pocket for small stuff. They were spared by Obamacare by some stroke of luck!

  • RenaD||

    I looked into HSAs last year, and it seems I still need to have an insurance policy in order to contribute. So in addition to paying my $500 a month premium (which, believe me, is the least expensive I've found—only people 30 years and younger can buy catastrophic plans), I also have to contribute to an HSA, which offsets . . . what? Future HC costs that I could also pay using savings invested at a higher rate?

    But if I'm wrong, let me know!

  • vek||

    That is not how it works, unless they have very recently amended something.

    1. There should be no age limit for buying catastrophic. This is the whole point of HSAs. When I looked into it for my father and I (we work together) we both got quoted for very reasonable high deductible plans, he's waaay over 30. You should check with a different HSA provider or something, perhaps that one had some weird internal rules? A few years ago he was $130ish bucks a month IIRC, and I was under $100. This was covering decent "OH SHIT!" levels of coverage with maybe a $5-10K deductible IIRC.

    2. The real trick with HSAs is that you can take PRE TAX income and shelter it. You can then choose to invest it ANY WAY YOU WANT. So you could decide to put 80% of it in mutual funds, and keep 20% in cash for actually paying out. Or 50/50. Whatever you want.

    The trick here is that any money you pull out to pay for out of pocket health expenses, including deductibles, YOU PAY NO TAXES on any gains made by your investments. You only pay taxes if you pull it out for non health related things, which you are free to do if you want.

    So it's a tax free investment platform, that you can technically spend on anything you want at any time if you are willing to pay the penalty in taxes. They're really the best thing available in the USA right now, so you should definitely look into it again. Imagine paying $1xx a month in premiums and being able to invest an additional $400 a month that is truly yours!

  • RenaD||

    I understand how the savings/investment/tax sheltering works (although at the time I explored HSAs two years ago, they did not seem to be self-directed investments, which is why I didn't think they were that great of an idea), but what I'm confused about is access to these catastrophic policies you mention.

    I was told by my accountant last year that I still needed to have a regular, Obummercare-approved—and HSA-qualified—plan in order to sign up for an HSA. Only Blue Cross Blue Shield offers HSA-qualified plans in my state, BUT their catastrophic is only available to people 30 years old and younger. Their least expensive high deductible plan is still $500 a month.

    So are you saying I was given incorrect information? That when I sign up for an HSA, they automatically sign me up for their HDHP plan as well, and it's much less per month than what I currently pay?

  • vek||

    Not a quick response, but in case you come back around!

    You can self direct. Different companies that offer them may have more or less limited options, just like 401K providers. It varies.

    As far as the insurance, most of the point of doing the HSA is/was to not need to have full coverage. You did mention something though that makes me wonder how universal this is, which is "in my state."

    It is possible that with the fragmented and stupid nature of our health care system that there isn't a provider IN YOUR STATE that offers anything sensible. That is not the case generally speaking, but I guess anything is possible... That said I would definitely read up on the subject in general yourself online. You should find people talking about having catastrophic plans all day long. IIRC one of the things about HSAs is that you CAN'T have a full coverage plan with them, not the other way around! I would then check with another pro in your state as well to get the local specifics.

    As I said, when I looked into them it was a pretty sweet deal overall. In theory even if your state sucks on the plan, the tax dodge and the fact that you can pay your high deductible out of there could still be worth it if you have the cash flow to do it.

  • RenaD||

    I appreciate your time and head's up. I will definitely try and find someone who can advise me on this!

  • markm23||

    I'm 64 and have high-deductible insurance plus an HSA. (Via an employer - does that make a difference?) The problem is that I'm told that I _have_ to enroll for Medicare by my 65th birthday or face (unspecified) penalties when I enroll later, and that I have to stop contributing to the HSA 6 months before enrollment...

  • vek||

    That doesn't sound like anything general I recall hearing about... Although there may be something about not contributing after 65 or something, kind of like with other retirement plans. They do have weird carve outs like that. HAVING to sign up for Medicare sounds weird though.

  • Brian||

    It's a little weird to listen to people who support a strong central government in everything except borders.

  • Thomas_J||

    As someone on the left who respects Reason's clear cut examination of issues and supports many of the issues Libertarians do, it pains me that they bought into the Labor department's false rational and borderline propaganda: "The percentage of small businesses offering healthcare coverage has been dropping substantially. For the self-employed, the individual market exchanges do not offer affordable coverage either; premiums more than doubled between 2013 and 2017 with deductibles increasing even more."

    Previous labor department studies concluded the reason small businesses dropped coverage is because state and federal exchanges offered coverage at much lower prices and even with increased premiums that were softened by subsidies. I live in New York my income is mixed between being self-employed and working part-time for a small business. Receiving insurance via my employer would be almost three time as much for the exact same coverage. I understand many readers don't want any subsidies or federal involvement at all , but decisions should not be based on the Trump Admisitration's shredding of fact.

  • Alex15||

  • Brian||

    The question isn't whether someone can choose to be gay/straight/man/woman, etc.

    The question is: is political bigotry ok?

    And people shouldn't be surprised after all we've embraced, that the answer for many is "no."

    Live by, die by.

  • Brian||

    Progressives will tell you: it's not so much that we care about Muslims, but that we need to call Trump a racist so we can throw him out.

    That's the real issue.

  • Incomprehensible Bitching||

    Black people cant be racist! It's one of Jose things we created that only white peoples can do, not blacks people!

    This isn't what we imagined for hate crimes at all. How could this entirely unforeseen outcome occur? Theyre not ding if fight!

  • Brian||

    Remember, kids:

    No one is coming for your guns.

    But we are the only ones standing between the women you love and botched coat hanger abortions.

  • Brian||

    "Poll shows strong support for Roe v. Wade."

    And scientists show you can power Los Angeles off the energy harvested from abortion threads.

  • Brian||

    That's the dirty little secret that some feminists don't want to talk about in popular media pieces:

    Many women reject feminism because there is, in fact, an advantage to playing th child/victim card whenever you want to. Men can't really do that. Not with any self-respect, at least.

    There's a reason some people don't rush into being strong, independent types, especially when they don't have to.

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