Up to 10% of healthy consumers could defect from ACA to association health plans, study shows

As many as 10 percent of healthy consumers who currently have health insurance through the Affordable Care Act or through individual plans sold off the exchange are projected to jump to less expensive coverage offered by association health plans, according to a study released by The Actuary.

Under the high end scenario, 10 percent of the individual market on and off the exchange would leave and purchase AHPs. 

A lower-end scenario projects that 3 percent of the individual market on and off the exchange would leave and purchase an AHP. 

Up to 35 percent of enrollees in ACA-compliant bronze plans would exit to go to an association health plan, the study said. 

In all cases, members shifting to association health plans would be healthier than those remaining on the exchanges, leading to a 1.4 to 4.4 percent increase in average ACA claims, the study said.

Insurers are looking at further destabilization of the ACA market under the final rule. 

If approved, AHPs would offer less expensive though less comprehensive coverage that will attract younger, healthier enrollees. AHPs would be exempt from the ACA requirement to cover essential health benefits.

This would leave consumers who have chronic or other conditions on ACA exchange plans, leading to higher claims and hikes in premiums that will also impact hospital reimbursement and budgets. 

The proposed final rule could affect the estimated 24 percent of ACA enrollees who are self-employed, according to the Society of Actuaries. Up to 11 million small business sole proprietors and employees currently get health insurance through the ACA. 

Many of these individuals would be expected to defect to association health plan coverage.

Currently, under federal rules, employers who want to purchase small-group market coverage must have at least one employee who is not a spouse, according to the Society for Actuaries. The proposed rule would allow self-employed individuals to be treated as employers to join the association, and at the same time be treated as employees under the benefit plan.

January's proposed final rule applies to employer-sponsored health insurance, allowing self-employed sole proprietors and small businesses to join together as a single group to purchase insurance in the large group market.

Centers for Medicare and Medicaid Services Administrator Seema Verma followed that rule with another to extend the length of short-term health plans from three to 12 months.

In April, America's Health Insurance Plans asked Health and Human Services Secretary Alex Azar not to offer short-term plans as a full replacement for comprehensive coverage, and to support policies to improve the individual ACA market.

AHPs have been around even prior to enactment of the Affordable Care Act. But the Obama administration required that health insurance policies sold through an association to individuals comply with the ACA's individual market reforms. Association coverage marketed to small employers was regulated as small-group coverage. 

The study said there is still uncertainty as to how many associations or issuers will form AHPs. The repeal of the ACA's individual mandate takes effect in 2019 so its impact has yet to be seen, though preliminary insurance rates for the 2019 ACA market show significant increases.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com