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Further evidence that critics of Association Health Plans are wrong: Ask the CBO
The Small Business Majority - a vocal critic of association health plans (AHPs) - recently told the House Small Business Committee that AHPs would "encourage younger, healthier groups to purchase inadequate coverage, thus increasing costs for most of the small group market and potentially cause a market death spiral." Virginia's governor opposes AHP legislation pending in the state Assembly because "AHPs will destabilize the Affordable Care Act's Exchange markets."
The non-partisan Congressional Budget Office (CBO) tells a different story.
In a CBO report released in January, CBO concluded that - after factoring in the availability of premium tax credits and behavioral changes among individuals and employers - AHPs will not "spur a noticeable decline in insurance coverage." Actually, CBO estimated that 400,000 people will be employed by small employers who will decide to offer health coverage for the first time, meaning AHPs will help people shift from being uninsured to insured. That's a coverage gain.
CBO explains that the availability of AHPs "will result in an increase of roughly 3% for premiums among the plans offered by the remaining employers [in the small group market]." But CBO also says that "because premiums for AHPs will be lower than premiums small employers are currently paying, premiums for the small group market as a whole are projected to decline." This market-wide reduction is likely due to small group market insurance carriers competing with AHPs, requiring these carriers to lower their premiums. On net, the increased competition will likely wipe-out the projected 3 percent premium increase in some markets.
When it comes to the individual market, CBO expects that out of 6.9 million individuals who are currently receiving a premium tax credit through an ACA Exchange, only 150,000 of these planholders will shift to an AHP. And, out of 5.2 million individuals in the "unsubsidized" individual market, CBO indicates that only 100,000 planholders will shift to an AHP. Objectively speaking, a Medicare-Buy-In program will likely cause a greater reduction in enrollment in the ACA's subsidized and unsubsidized individual market.
To the question about comprehensive coverage, CBO says that the coverage provided by the newly offered AHPs may not cover all of the essential health benefits (EHBs), but AHPs will "still offer coverage that is similar to comprehensive employer-based coverage." Interestingly, the evidence that we have so far shows that AHPs are indeed covering all 10 EHBs, either by offering plan designs that cover all 10 EHBs or offering multiple plans, some of which are EHB plans and some which are not. This ensures that participants will always have access to plans that cover all 10 EHBs, while also providing flexibility to participants who want a health plan that best fits their needs. This is what large employers currently do, and you don't hear critics of AHPs complaining about large employer plans.
CBO also confirms that AHPs "cannot refuse coverage to association members," which means people with pre-existing conditions are protected. I hope CBO's statement finally puts to bed the question of whether AHPs can deny coverage for people with pre-existing conditions. They cannot.
CBO's analysis is important because again, the agency is non-partisan, a trait that critics of AHPs do not enjoy. As a former Senate Finance Committee staffer, I can tell you that CBO's analysis is authoritative, and members of Congress and their staff are bound to CBO's estimates when legislating, regardless of whether you agree or disagree CBO's conclusions. The bottom-line is this: AHPs will provide comprehensive coverage and protect people with pre-existing conditions, AHPs will not impact the health coverage people currently have, and AHPs will actually provide hundreds of thousands of people health coverage for the first time.
Christopher E. Condeluci is former Counsel to the Senate Finance, and director of the Coalition to Protect and Promote Association Health Plans