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“By The Time They Discover They’ve Been Sold A Fraudulent Product, The Promoter Will Be On His Way To The Caribbean”: Responses to the Trump Administration’s Proposed Junk Insurance Rule

By January 5, 2018No Comments

Yesterday, the Trump Administration announced a proposed rule to expand association health plans, which will gut protections and raise costs for people with pre-existing conditions and further destabilize the marketplace. The coverage of these plans has focused on what they are: junk insurance plans. Don’t believe us? Take a look for yourself…

Chris Hansen, American Cancer Society Cancer Action Network: “The Rule Proposed Today Will Almost Certainly Result In More People Facing Financial Distress When An Unexpected Health Crisis Happens.” “Consumer groups, state officials and Blue Cross and Blue Shield plans have strenuously opposed similar ideas for years. Association health plans, they say, 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 already have risen steadily as Republicans have taken aim at President Barack Obama’s signature domestic achievement. ‘Those with serious health conditions like cancer would be left paying ever-increasing premiums for comprehensive coverage,’ said Chris Hansen, the president of the American Cancer Society Cancer Action Network. ‘The rule proposed today will almost certainly result in more people facing financial distress when an unexpected health crisis happens.’” [New York Times, 1/4]

Marc I. Machiz, Former Labor Department Investigator: “Any Idiot With A Word Processor Can Create An Association In 10 Minutes…By The Time They Discover They’ve Been Sold A Fraudulent Product, The Promoter Will Be On His Way To The Caribbean.” “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. Marc I. Machiz, who investigated insurance fraud as a Labor Department lawyer for more than 20 years, said the proposed rules were an invitation to more scams. ‘Any idiot with a word processor can create an association in 10 minutes and market it to small employers and individuals who certify that they are self-employed,” Mr. Machiz said. ‘The employers and individuals will pay premiums. By the time they discover they’ve been sold a fraudulent product, the promoter will be on his way to the Caribbean.’” [New York Times, 1/4]

Health Affairs: “The Proposed Rule Itself Acknowledges That Some AHPs Have ‘Failed To Pay Promised Benefits To Sick And Injured Workers While Diverting, To The Pockets Of Fraudsters, Employer And Employee Contributions.” “The proposed rule itself acknowledges that some AHPs have ‘failed to pay promised health benefits to sick and injured workers while diverting, to the pockets of fraudsters, employer and employee contributions from their intended purpose of funding benefits’ and that Congress enacted reforms to address AHP abuse in the past. Yet, by broadening the availability of AHPs and relaxing commonality of interest standards, the proposed rule likely opens the door to additional fraudulent AHP behavior and the insolvency and unpaid claims that accompany it. The rule acknowledges that the Department would need to commit additional resources to AHP oversight if the proposal is finalized to address AHP mismanagement and abuse.” [Health Affairs, 1/5]

Los Angeles Times: CBO: Previous Proposals “Would Have Made Coverage Unaffordable For Many Consumers With Preexisting Medical Conditions.” “Many patient groups and consumer advocates — who are already alarmed by Trump administration efforts to undermine the 2010 health law — fear that less comprehensive health plans will leave Americans without vital protections… By allowing healthier Americans to buy plans that don’t cover expensive medications or other medical benefits, these plans also risk driving up costs for sick patients who need the more extensive coverage. For example, proposals last year by congressional Republicans to allow health plans to offer slimmed down benefits would have made coverage unaffordable for many consumers with preexisting medical conditions, according to analyses by the nonpartisan Congressional Budget Office.” [Los Angeles Times, 1/4]

The Hill: Association Plans “Would Likely Drive Up Premiums” And “Unlike Obamacare Plans, AHPs Could Charge Higher Premiums Based On Age And Gender.” “Critics say AHPs could still find other ways to cherry-pick only the young, healthy people. ‘You can be sure they are going to design benefit packages to attract healthier people,” and “siphon them away from the individual market,’ said Sabrina Corlette, a professor at the Georgetown University Center on Health Insurance Reforms. Leaving the less healthy individuals in the individual and small group markets would likely drive up the premiums. AHPs could also decline to cover prescription drugs, which could discourage sick people from enrolling and, unlike ObamaCare plans, AHPs could charge higher premiums based on age and gender.” [The Hill, 1/4]

America’s Health Insurance Plans: “We Are Concerned That This Could Create Or Expand Alternative, Parallel Markets For Health Coverage, Which Would Lead To Higher Premiums For Consumers, Particularly Those With Pre-Existing Conditions.” “Supporters of the ACA have said that relaxing the rules on associations could destabilize the individual insurance market, where roughly 17 million people buy their own insurance either on or off the ACA exchanges. And they say enabling individuals to join associations would provide an off-ramp from the exchanges that would drain away the younger, healthier people who are needed to keep premiums in check. ‘We are concerned that this could create or expand alternative, parallel markets for health coverage, which would lead to higher premiums for consumers, particularly those with pre-existing conditions,’ said a Dec. 14 letter from groups including America’s Health Insurance Plans, a top insurers’ trade association.” [Wall Street Journal, 1/4]

Washington Post:”The Rules Would Allow Such Plans To Be Reclassified So They No Longer Would Have To Include A Set Of 10 Essential Health Benefits – Including Maternity Care, Prescription Drugs And Mental Health Services.” “Specifically, the rules would allow such health plans to be reclassified so they no longer would have to include a set of 10 essential health benefits — including maternity care, prescription drugs and mental health services — that the ACA requires of insurance sold to individuals and small companies… Unlike [marketplace plans], the association plans could charge customers different prices depending on their age, gender and location. ‘The potential is that it creates an uneven playing field,’ said Kevin Lucia, a research professor at Georgetown University’s Center on Health Insurance Reforms, who worked on early stages of the 2010 health-care law within the Obama administration.” [Washington Post, 1/4]

Politico: State Insurance Advocates “Have Warned That Lax Rules Could Open The Door To A New Wave Of Poorly Regulated Health Plans That Exclude Coverage Of Key Services. However, state insurance regulators and Obamacare advocates have warned that lax rules could open the door to a new wave of poorly regulated health plans that exclude coverage of key services required by the Affordable Care Act, such as hospitalizations and prescription drugs. ‘The Trump administration has declared open season for fraudsters selling junk insurance while those with pre-existing conditions will find health care further and further out of reach,’ said Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee.” [Politico, 1/4]

USA Today: As Proposed, “These Plans Are Governed By State Insurance Rules So Might Not Have As Sweeping Coverage Of What the ACA Considered ‘Essential Health Benefits.’” The regulations would allow the expansion of so-called ‘association health plans,’ which are groups of small businesses and possibly individuals that band together to purchase insurance. These plans are governed by state insurance rules so might not have as sweeping coverage of what the ACA considered ‘essential health benefits,’ such as maternity care, prescription drug coverage or hospitalization. Some states actually require more comprehensive benefits though… Consumers could buy these plans across state lines, although whether doctor and hospital networks would be sufficient remains a question.” [USA Today, 1/4]

Associated Press: Insurance Industry Groups Are Skeptical Of Trump’s Idea, Saying It Could Undermine The Current State Markets.” “The new rule would make it easier for groups, or associations, to sponsor health plans that don’t have to meet all consumer protection and benefit requirements of the Obama law… Insurance industry groups are skeptical of Trump’s idea, saying it could undermine the current state markets. Patient groups are concerned about losing protections. Some state regulators object to federal interference.” [AP, 1/4]

Reuters: “The Rule Could Destabilize Several States’ Individual Insurance Markets.” “Proponents of Obamacare say the rule would undermine the individual insurance market created under the law by allowing young and healthy people to purchase cheaper insurance, leaving the sickest and most expensive patients in the Obamacare markets, driving up costs. Hospitals, insurers and medical groups criticized the rule in December and said it would make health insurance unaffordable for people with pre-existing conditions. The rule could destabilize several states’ individual insurance markets because healthier people could access cheaper insurance, said Evercore ISI analyst Michael Newshel, adding that it is still unclear whether significant numbers of people will opt for the slimmer plans.” [Reuters, 1/5]