Trump Clears Way for Health Plans With Lower Costs and Fewer Benefits

WASHINGTON — The Trump administration is poised to issue a sweeping rule that makes it easier for small businesses to band together to create health insurance plans that skirt many requirements of the Affordable Care Act, offering lower costs but also fewer benefits.

The final rule is to be unveiled Tuesday, administration officials and congressional aides said.

President Donald Trump has said millions of people could get cheaper coverage from the new “association health plans.” But consumer groups and many state officials are opposed, saying the new plans will siphon healthy people out of the Affordable Care Act marketplace, driving up costs for those who need comprehensive insurance.

The new entities would be exempt from many of the consumer protections mandated by the Affordable Care Act. They may, for example, not have to provide certain “essential health benefits” like mental health care, emergency services, maternity and newborn care, and prescription drugs.

As many as 11 million Americans could find coverage under the new health plans, the Labor Department said in drafting the rule, which carries out an executive order signed by Trump on Oct. 12.

The rule will allow small-business owners, their employees, sole proprietors and other self-employed people to join together to buy or provide insurance in the large-group market through association health plans.

Because they will be exempt from many onerous requirements of the 2010 health law, Trump has said, the association health plans can “provide more affordable health insurance options to many Americans, including hourly wage earners, farmers, and the employees of small businesses and entrepreneurs that fuel economic growth.”

The new health plans might, for example, appeal to restaurant workers, real estate agents, dry cleaners, florists, plumbers and painters, officials said.

The new rule takes a step toward fulfilling Trump’s campaign promise to make it easier for companies sell insurance across state lines.

“The new rule will allow national trade associations to offer insurance to their employer members in multiple states,” said Christopher E. Condeluci, an employee benefits lawyer who used to work for Republicans on the Senate Finance Committee. “Small employers and independent contractors will be able to get coverage through group health plans, just like the insurance offered by large employers.”

Republicans in Congress have been trying for two decades to promote association health plans through legislation. The House passed a bill that included such plans in 1998, but it died in the Senate. President George W. Bush tried again in 2003 and 2004. The House passed a bill last year to authorize such health plans. And Sen. Rand Paul, R-Ky., has championed a similar bill in the Senate.

Now the Trump administration is using its regulatory authority to accomplish what Congress could not.

Trade groups like the National Restaurant Association, the National Retail Federation and the National Federation of Independent Business have supported association health plans and could potentially sponsor them.

But consumer groups, state officials and Blue Cross Blue Shield plans have long opposed such ideas. They say association health plans will tend to attract employers with younger, healthier workers, leaving behind sicker people in more comprehensive, more expensive plans that fully comply with the Affordable Care Act.

That could drive up premiums, which have increased as Trump and Republicans in Congress have undercut many elements of the law, President Barack Obama’s signature domestic achievement.

People with serious illnesses like cancer could face “ever-increasing premiums for comprehensive coverage,” said Chris Hansen, president of the lobbying arm of the American Cancer Society.

Similar health plans have a history of fraud and abuse that have left employers and employees with hundreds of millions of dollars in unpaid medical bills. The problems are described in dozens of court cases and enforcement actions taken over more than a decade by federal and state officials.

The Labor Department says it has identified many “unscrupulous promoters who sell the promise of inexpensive health benefit insurance, but default on their obligations.”

The Coalition Against Insurance Fraud, representing insurers, consumers and law enforcement officials, met last month with Trump administration officials and emphasized the need for states to have a strong role in combating possible fraud by association health plans.

In another move this summer, Trump is expected to issue a final rule expanding access to “short term, limited duration” insurance, allowing such policies to run for 364 days, instead of the current limit of three months.

These short-term plans — originally intended for people between jobs — are cheaper than comprehensive insurance, provide fewer benefits and would also be exempt from many requirements of the Affordable Care Act.