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Proposed Regulations Would Devastate Private Insurance Markets

Tuesday, March 6, 2018
DCHBX urges U.S. Labor Department to withdraw its proposal on association health plans

(Washington, DC) – Today, the DC Health Benefit Exchange Authority (DCHBX) submitted official comments to the U.S. Department of Labor (DOL) urging DOL to withdraw its controversial proposed rule on association health plans (AHPs). The proposed rule, if finalized, will cause people in the District to become uninsured and lead to premium increases for residents and small businesses in the District. According to Oliver Wyman actuaries, thousands of people will become uninsured, specifically as many as 2.4% of people with small group coverage and 2.94% of people with individual coverage currently would become uninsured in the District as a result of this proposal. Small businesses and residents who keep their comprehensive coverage will see premium increases -- small group claims costs would increase by as much as 25.8% and individual market claims costs would increase by as much as 10.9% -- because association health plans would be allowed to insure only the healthiest businesses and individuals causing rates to increase for everyone else.

"This proposed regulation essentially repeals the Affordable Care Act without Congress," said Mila Kofman, JD, Executive Director of the DC Health Benefit Exchange Authority. “By exempting AHPs from the requirements of the ACA, AHPs will cherry pick the healthiest businesses and people to cover. Older and sicker people will be forced to rely on state regulated markets, which will collapse if there no healthy people participating. There is also an undisputed history of AHP fraud and insolvency. This proposal would set state regulated markets back to the turbulent days before the ACA, and make it even worse by tying the hands of states, preventing them from protecting their residents and small businesses.”

Under DOL’s proposed rule, AHPs would be would be exempt from most of the ACA’s consumer protections, such as being required to cover essential health benefits like maternity, mental health, and prescription medication. Under this proposed rule, AHPs would also be exempted from the ACA rate reforms that prohibit premiums based on gender, group size, and industry/occupation, and limit age-based rating.

DOL’s proposed rule also creates new ambiguity on whether state regulators can continue to have oversight of AHPs and enforce state consumer protection laws. With no meaningful standards or oversight, the proposal opens the door to scams and insolvencies, which in the past have left hundreds of thousands of people with millions in unpaid medical bills across the United States.

DOL’s proposal would destabilize the state regulated individual and small group markets, undermine a state’s authority to regulate health insurance markets and to protect consumers, and expose small businesses and individuals to fraud and insolvencies.

The ACA has enabled the District of Columbia to expand health coverage so that more than 96% of residents are now covered. Currently, the District has the lowest uninsured rate in the city’s history and ranks between first and third (depending on the study) among all states in the nation for having the lowest uninsured rate.

The DC Health Benefit Exchange Authority (DCHBX) is a public-private partnership established to create and operate DC’s state-based online health insurance marketplace, DC Health Link.