Senate passes bill legalizing Association Health Plans

Feltes’s version heads to House after party-line vote

The Senate passed a bill Thursday that would legalize Association Health Plans, allowing small businesses and the self-employed to ban together in hopes of getting better coverage.

AHPs provide an affordable option to small businesses, said Sen. Dan Feltes, D-Concord, the prime sponsor of the bill “but there would be businesses left behind in the small group and individual market and we have to protect them too.”

Sen. Jeb Bradley, R-Wolfeboro, who also offered a bill and an amendment allowing AHPs, said that Feltes’ bill was so “rigorous, it’s unlikely to offer the economic benefits to make that jump. It presents an opportunity that is rather hollow if it won’t work.”

AHPs, the primary alternative to the Affordable Care Act marketplace, allow companies and sole proprietors to form associations based on interest or geography. Previously such organizations had to be very large and within an existing organization so the self-employed couldn’t join. There are only a handful in existence in New Hampshire. The Trump administration loosened up the rules – enabling Uber drivers, freelance writers or chambers of commerce to form them, but it left to the states the power to regulate them.

New Hampshire’s current law doesn’t allow AHPs. The state insurance department held a group of meetings with stakeholders to amend existing law, trying to strike a balance that would allow the option while making sure that the groups didn’t cherry-pick the market.

What the Department came up with was risk assessment, the same tool used – and not without controversy – within the ACA, where companies with a lower risk population, and presumably lower medical cost, pay insurers with a higher risks.

The question is how much they should pay. If it was totally equal, it would not be economically advantageous to form AHPs. If it was too great a differential, it might hurt the small group market, which would flee to the lower cost alternative, and the individual market, because self-employed individuals now primarily covered by the ACA exchanges could join the AHPs.

Under Feltes’s bill, there should only be a differential of 5 percent that would be reduced to 3 percent with payment. It would kick in if 2,000 members started moving from existing plans to AHPs.

Under Bradley’s bill, the differential would be 20 percent reduced to 12 percent, and would kick in if 5,000 members start moving to AHPs.

There are other differences as well. AHPs depend on a federal waiver which takes time. In the meantime, the self-employed couldn’t join existing associations as self-employed. This is important to the auto dealers, who wanted to allow self-employed mechanics to join and Realtors who would like to include individual Realtors in their plan. Feltes moved up the time to apply for that waiver but Bradley would have a provision in his bill that would allow them to join while waiting for the waiver.

Feltes’s version won in a 14-10 party line.  The bill now goes to the House.