Association Health Plans (AHPs) once allowed small businesses and the self-employed to band together to purchase insurance, giving them access to the economies of scale, negotiating power and lower premiums typically reserved for large employers. Although these plans have since been significantly curtailed, proposed legislation — the Association Health Plans Act — seeks to reverse that trend by expanding access again. A revival of AHPs would offer more choices and introduce meaningful competition into a stagnant health insurance market.
AHPs were once far more accessible, but that changed with the passage of the Affordable Care Act, which required many AHPs to comply with coverage requirements that drove up AHPs’ costs. However, the ACA exempted certain groups — primarily professional associations and unions, allowing them to continue offering plans without meeting all ACA requirements. As a result, AHPs that were not exempted started to disappear.
In 2018, President Trump attempted to expand eligibility for AHPs through regulatory action, but the effort was overturned in court after some states challenged the administration’s legal interpretation of the term “employer” to include associations of unrelated businesses and self-employed individuals with no employees.
Despite the legal setback, the economic rationale behind AHPs remains strong. These plans offer multiple benefits to employers and consumers by increasing their health insurance options. Through simple voluntary association, small businesses, gig workers, and sole proprietors gained negotiating power comparable to large firms. According to estimates from the Congressional Budget Office and Joint Committee on Taxation, AHPs could reduce small-group premiums by 30 percent.
Other research confirms similar savings for comprehensive coverage. When eligibility was expanded briefly in 2018, projected savings on premiums ranged from $1,900 to $4,100 in the small group market, and $8,700 to $10,800 for individual plans.
Critics argue that AHPs may segment the market by attracting healthier people, thereby undermining ACA risk pools and increasing costs for sicker enrollees. However, proposals for AHPs explicitly include nondiscrimination provisions and protections for individuals with pre-existing conditions, preventing insurers from selectively covering only low-cost groups. AHPs can provide true competition for ACA plans and can drive down costs across the board.
While the limitations imposed by the ACA cannot be undone by executive order, Congress has the power to repeal them. Reforms like the Association Health Plans Act would be a good start. It would broaden the definition of eligible associations, extend AHP access to self-employed individuals, and preserve key consumer protections.
Expanding exemptions from ACA small-group mandates would reduce regulatory costs for small employers, making coverage far more affordable and more customizable. Plans could be better tailored to meet members’ needs.
Congress has a chance to restore a path to affordable, flexible health coverage for millions of small-business owners and independent workers. AHPs aren’t a loophole — they’re a tool to level the playing field. With strong safeguards in place, expanding AHPs would introduce long-overdue competition, customization and cost relief. Lawmakers should act now to bring health insurance back within reach for millions of Americans by letting them work together.
Reprinted with permission from DC Journal by Justin Leventhal.
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
Obamacare was meant to fail so the people could be convinced to go with Total Government Healthcare for All! Now the whole thing is a racket to prop up insurance businesses to provide campaign donations to the legislators who keep the gravy train operational! Greed is the motto of Washington and always will be as long as ungodly folks are elected to office and not held accountable for their job!
Hello,
A couple of items.
1) Reading the item regarding the 30% premium reduction, the linked article does not explicitly say that AHPs will reduce premiums by this amount (at least the way I read it). It says that large business owners pay 30% more than small business owners.
Health care coverage has become increasingly unaffordable, with high costs being most acutely felt by small businesses. Workers employed by small firms pay over $8,300 on average towards premiums each year for family coverage, nearly 30 percent more than those at large firms.[2] AHPs allow small businesses, and their employees, to access the benefits that large employers receive, including lower costs for health care coverage. Without affordable ways to provide health insurance coverage, many small businesses may be forced to stop offering coverage, pushing employees into the individual market, where costs continue to skyrocket. This year, premiums on the Affordable Care Act (ACA) marketplaces increased by six percent.[3] [4]
2) AHPs have potential, but they shouldn’t be weighted towards plans classified as providing “catastrophic” coverage only. Those have limited value and are not comparable to ones offered on the marketplace.
What about unpaid Full-Time Caregivers who are too young to collect Social Security?? I’m 80 and my wonderful, loving hubby is only 59, but he stays home and cares for me 24/7 – literally! 3 meals a day, cleaning, and cleaning up my messes and yardwork… and keeping me from falling and driving me to my doctors visits. (I have CHF, Stage 3 Kidney something or other, arthritis in my spine, neck, both my hips and a very bad knee. All my walking is done with a walker or wheelchair and his help going down stairs to our truck. We subsist on my SS…. He had Obama care and last year he was tested and found out he has COPD and Emphysemia – and his bills are tremendous! I think Obama care is totally worthless. Many of my own dr/hosp bills have gone to collection, so how are we to pay for mine and his bills???
Those AHPs were great and so much better for smaller businesses than the UNaffordable Care Act that lost so many fulltime employees their jobs (like me) and closed down many a small business!