Nevada business groups launch association health plan

Three chambers of commerce in Nevada will be among the first small business groups in the country to offer an association health plan, taking advantage of a new Trump administration rule to sidestep Affordable Care Act rules and offer cheaper plans.

The Henderson, Boulder City and Latin chambers of commerce in Clark County, Nevada, filed notice Friday that starting Sept. 1, they will launch several fully insured plans, including an HMO, a PPO and a point of service plan through UnitedHealth Group. The three chambers represent nearly 2,000 small businesses, typically with 10 or less employees.

The Las Vegas Metro Chamber of Commerce also said it plans to start an association health plan in September, though it's still working with an insurance partner on it.

"Premiums continue to go up and up over recent years, and we expect to see savings up to 15% on premiums with this association health plan opportunity," said Scott Muelrath, CEO of the Henderson Chamber of Commerce, which led the AHP development.

The Nevada moves are early signs that small business groups are interested in using the administration's controversial new rule to set up AHPs, which may offer lower premiums because they do not have to meet the Affordable Care Act's requirements on essential benefits and certain other consumer protections.

That's despite a federal lawsuit filed last month by 12 Democratic state attorneys general to block the new rule issued by the U.S. Department of Labor in June. The suit alleges the rule violates the ACA, the Administrative Procedure Act, and the Employee Retirement Income Security Act.

Insurance experts caution that while some small employers with younger and healthier employees may see lower rates in AHPs than in the ACA-regulated market, other firms with older or sicker employers or with more female employees may see higher rates.

The Labor Department rule allows AHPs to set rates for different member groups based on age, gender, occupation, size of group, and geographic location. A UnitedHealth Group spokesman said his company would set different premiums for different employer groups within the Clark County AHP based on all those factors except gender, and that's how some groups would be able to pay lower rates than they do now under ACA rules.

"There are, potentially, opportunities for insurers to underwrite based on a variety of things, and that might not meet everyone's needs," said Heather Korbulic, executive director of the Silver State Health Insurance Exchange, Nevada's ACA exchange.

A Labor Department spokeswoman said she was not allowed to identify business groups that are starting AHPs. But she said her department is hearing lots of anecdotal evidence of enthusiasm for these plans.

At a business roundtable event in Las Vegas last month, President Donald Trump and Labor Department Secretary Alex Acosta touted AHPs, with Trump promising that "millions and millions of people" soon would be able to enroll in these plans that would offer them "tremendous negotiating rights."

Trump encouraged the Las Vegas Metro Chamber of Commerce to restart its large AHP, which it disbanded in 2014 after the ACA began requiring all individual and small business plans to cover 10 categories of essential benefits. "You know, the insurance companies are going crazy for this," he was quoted as saying. "So you're going to have a lot of fun."

Some national business groups, however, have expressed disappointment over the federal rule, saying it does not allow them to form large association plans across state lines unless all the member companies are in the same occupation or industry.

State insurance regulators in Pennsylvania, New York, Vermont and other states have issued emergency rules or bulletins limiting AHPs, warning that these plans could destabilize their insurance markets and lead to fraud and insolvencies.

But Nevada Insurance Commissioner Barbara Richardson welcomed the new AHP in Clark County. "This is exciting news for Nevada, because it provides additional insurance options for Nevadans which may fit their personal needs and the needs of their families," she said in a written statement. She added that it "creates a more competitive small group market."

Leaders of the business chambers in Clark County said their AHP will offer all ACA essential benefits and meet other ACA requirements as well. But they were not aware that different chamber members would face different rates based on the rule's allowed rating factors.

"United has assured us their rates will be much lower and there will be more plan choices," said Peter Guzman, CEO of the Latin Chamber of Commerce, who admitted he didn't know whether member businesses would face different rates.

Participating business owners in the Clark County AHP must have at least one employee who's not the person's spouse, Muelrath said. But the chambers hope to soon allow sole proprietors with no employees to enroll, which is allowed by the Department of Labor rule.

That raises concerns about whether the AHP will siphon younger and healthier individuals from Nevada's ACA-regulated individual market, driving up premiums in that market.

"We're assessing how that would impact the individual market," Korbulic said. "Individuals who qualify for premium subsidies will find a better deal on the exchange. But this may be an opportunity for those who are not eligible for subsidies."

Muelrath said the new AHP in Clark County will be attractive to small firms because it will offer 10 plan choices with robust and comprehensive benefits equal to ACA plans. "We have consciously steered away from narrow or skinny plans," he said. "We didn't see them as a good consumer product."

The AHP will be able to offer lower premiums than ACA plans, he explained, because UnitedHealth Group is a large and powerful player in the southern Nevada market.

But some experts say the main way an AHP will be able to charge lower premiums while still offering ACA-compliant benefits is by cherry-picking healthier employer groups who have lower medical costs.

"I suspect the chambers intend to have a rating methodology that's attractive to some and less attractive to others," said Joel Ario, managing director at Manatt Health and a former state insurance commissioner. "They'll end up with a better-than-average risk pool in the association, at the direct expense of people who can't get into the association."