Stephanie Innes | Arizona Republic| April 1, 2019
Lauren Klinkhamer of Tucson speaks during a protest in Sen. Jeff Flake’s Capitol Hill office. Klinkhamer said she has 16 chronic medical conditions, but fears the current Senate plan to replace Obamacare will cost her health insurance.
A bill that would expand access to “association” health-insurance plans in Arizona would put into state law elements of a Trump administration rule that was just rejected by a federal judge.
Senate Bill 1085, which is moving through the Arizona Legislature, expands the ability for small businesses, including sole proprietors, to band together and purchase health insurance as an “association.”
The bill codifies into state law elements in a final rule issued by the U.S. Department of Labor in June that loosened some of the regulations on association health plans to make them more attractive to businesses that have not previously used them. It also added sole proprietors into the category of people who could join associations and buy health insurance.
The federal judge’s ruling Thursday casts some uncertainty on the proposed Arizona legislation. The judge's opinion says the Trump administration's final rule is an intentional “end-run” around the federal Affordable Care Act.
“I would think associations looking to form plans would need to think twice about doing so, given this uncertainty,” said Larry Levitt, vice president of the Kaiser Family Foundation. “If this ruling stands, it would limit states’ ability to open the door to more association health plans.”
Debbie Hann, chief operating officer for the Arizona Small Business Association, said her organization remains positive, in spite of the ruling, and is moving forward with plans to offer health insurance to members.
Hann said her association began taking steps to offer health insurance after Trump issued an executive order in October 2017, calling for expanded access to association health plans.
What is an association health plan?
Under SB 1085 and the federal rule, an association of people working in a similar trade, for example, would have negotiating power to get its members cheaper insurance options. Associations could purchase insurance as a large-group employer, and some may choose to self-insure, which critics fear will increase the risk for insolvency. The Arizona Department of Insurance did not take a position on SB 1085.
Proponents say broadening access to the plans will allow everyone from self-employed millennials in the tech industry to small-business owners access to insurance that is otherwise unaffordable for them. Association plans may charge higher rates based on factors such as age and gender, but the association cannot use health status to determine eligibility, premiums, or benefits.
“This is going to be a game-changer for our members. It will level the playing field for recruitment and retention,” said Hann of the Arizona Small Business Association.
Supporters include Blue Cross and Blue Shield of Arizona, the Arizona Association of Health Underwriters, and the Arizona Technology Council.
Trump has called association health plans “tremendous insurance at a very low cost.”
“I think we are all supportive of things that are more affordable for consumers and choice is always great. But you have to read the fine print,” said Swapna Reddy, a clinical assistant professor at Arizona State University's College of Health Solutions.
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