The Future of the Affordable Care Act under President Trump: Stakeholders Respond to the Proposed Association Health Plan Rule. Part II: Consumer Advocates

The Trump administration has received over 900 comments from the public on its proposed rule to promote the formation of association health plans (AHPs). The feedback comes from insurance companies, business groups, consumer advocates, state officials, and many others.

To expand access to AHPs, the U.S. Department of Labor (DOL) proposed relaxing the standard for small groups and self-employed individuals to band together and act as a single large employer for the purpose of buying health insurance. These arrangements would qualify as large group coverage, thus exempting them from the ACA’s essential health benefit standard, rating restrictions, and other individual and small-group market requirements. For a more detailed overview of the proposed rule, you can download our issue brief here.

To understand the potential impact of the proposed rule, CHIR reviewed a sampling of comments from state officials, consumer groups, insurers, and business representatives. For the first blog in our series, we summarized comments submitted by eighteen state attorneys general. This second post summarizes comments from nine consumer and patient advocacy organizations, a patient coalition, and a consumer-provider coalition:


American Cancer Society-Cancer Action Network (ACS-CAN)

Center on Budget and Policy Priorities (CBPP)

Community Catalyst

Consumers Union

Families USA

National Health Law Program (NHeLP)

National Partnership for Women & Families (NPWF)

Young Invincibles

Patient coalition (representing 15 patient groups)

Consumer-provider coalition (representing 44 state and national groups)

Collectively, consumer stakeholders urged DOL not to finalize the proposed rule, arguing that relaxing regulations of AHPs would expose consumers to fraud and abuse and result in higher premiums and fewer plan choices for individuals and small businesses purchasing coverage in the ACA-compliant markets. Consumer groups’ comments on specific provisions of the rule are summarized below.

Rolling back the longstanding “commonality of interest” test

Groups such as CBPP, Community Catalyst, and ACS-CAN urge DOL to maintain the longstanding “commonality of interest” test for determining if an association qualifies as a single employer benefit plan. Prior DOL interpretation of the federal law known as ERISA required that such associations be formed for some purpose other than the offering of health benefits, in order to distinguish them from traditional commercial insurance. Consumer stakeholders argue that removing the “commonality of interest” test will allow the sale of insurance to small businesses and individuals that is exempt from the rules and standards that apply to commercial insurers in those markets, tilting the playing field and exposing employers and individuals to potential fraud.

Consumer groups such as CBPP and Families USA further note that allowing AHPs to form based on common geography alone could promote the practice of “redlining,” or rejecting certain populations based on their geographic location. This could lead to racial or economic discrimination.

Allowing self-employed individuals to join AHPs

The proposed rule would allow people who are self-employed (DOL calls them “working-owners”) to enroll in group health plans sponsored by AHPs. Consumer groups such as Community Catalyst, NHeLP, ACS-CAN and others urge DOL not to finalize this provision on both legal and policy grounds. First, they argue that the proposed rule violates federal law, which requires employers to have two or more employees in order to qualify for a group health plan. Second, they argue that the proposal is bad public policy because it will lead to the cherry picking of younger, healthier individuals from the ACA-compliant individual market, resulting in higher premiums and fewer plan options for those who remain.

CBPP and Families USA also note that DOL’s proposed rule provides for inadequate verification of an individual’s self-employed status – DOL proposes that an attestation would be sufficient. They argue that this could lead to fraud, as well as elevating the risk that AHPs will siphon healthy individuals away from the ACA-compliant market.

Nondiscrimination provision

One provision of the proposed rule that consumer organizations supported in their comments would prohibit AHPs from using health status to determine eligibility, rates or benefits for member employers. Consumer groups generally applaud this provision, and urge that DOL implement it “without exceptions or delay.”

However, they note that the nondiscrimination provision “does not go far enough to prevent cherry picking.” AHPs would still be able to discriminate against employer groups or individuals based on other factors that can be a proxy for health status, such as age without the ACA’s 3:1 limit, gender, and industry type. Further, they express concerns that AHPs would be allowed to exclude major categories of coverage, such as maternity, prescription drugs, or mental health treatment in order to deter enrollment among sicker employer groups or individuals. The organization Young Invincibles notes that such practices would not only make ACA-compliant coverage more expensive for older, sicker individuals but “it would also hurt the roughly 30 million Millennials with pre-existing conditions who may need the coverage protections available through the ACA marketplaces.”

Patient groups also highlight that AHPs would not have to comply with the ACA’s minimum actuarial value standards, meaning that the plans could end up covering little of enrollees’ actual health costs. ACS-CAN noted: “Enrollees who signed up for an AHP assuming that they were healthy and in little need of health care could find themselves uninsured for critically needed health care in the event of a serious illness, like a cancer diagnosis.”

Other comments observed that AHPs would not need to meet the ACA’s network adequacy requirements, meaning that a plan could, for example, exclude oncologists or cardiologists from its network. Even with the nondiscrimination provision, these groups argue, exemptions from ACA rules would effectively split the individual and small-group markets into healthy and non-healthy segments. Commentators such as a coalition of consumer and provider groups urge that AHPs be made subject to the ACA’s essential health benefit, rate reforms, guaranteed issue and single risk pool requirements.

Further, in order to preserve consumers’ coverage choices, a coalition of patient advocates urge the administration to allow employees of small businesses that choose to enroll in AHPs to remain eligible for premium tax credits for ACA-compliant coverage.

Consumer Protection and Fraud

Consumer groups argue that the proposed rule would “open the floodgates” to fraud and insolvency, noting that AHPs have long been a “vehicle for selling fraudulent insurance.” Several question DOL’s capacity and expertise to conduct proper oversight and adequately protect consumers, particularly given the proposed rule’s ambiguity about the scope of state authority. For example, ACS-CAN argues: “The Department of Labor would need far greater resources than it has had in the past or currently exists to fully monitor AHPs in all 50 states and provide for effective enforcement where noncompliance issues arise.” Families USA observes that, in spite of its oversight responsibility, the last time DOL did a comprehensive review of AHP filings was in 2014. NHeLP points to data showing that, during a cycle of AHP scams around 2000, states issued cease and desist orders against 41 entities, while DOL shut down only three entities.

Commentators also urge DOL to improve its notice requirements. For example, AARP argues that AHPs should be required to provide advance notice of all fees and services, insurance contracts, and legal obligations under the contract. Families USA notes that currently, it is difficult for a small employer or individual to learn whether an AHP has filed the appropriate forms or has ever had an enforcement action taken against it, and urges DOL to make this information easier for purchasers to access.

CBPP also observes that state legislatures and insurance departments will need time to assess their current regulation of AHPs and potentially update it in response to the rule. They ask that the DOL delay the effective date of the rule for at least three years, in order to give states sufficient “lead time” to adjust.

State regulatory authority

Some comment letters express concern about the DOL proposal to allow national AHPs to be sold “across state lines.” ACS-CAN, for example, notes that rule doesn’t clearly endorse the ability of a state to regulate an out-of-state AHP, raising concerns that if any or all state laws are preempted from applying to an AHP domiciled elsewhere, it could leave consumers without recourse if problems arise. And Community Catalyst reminds DOL that any confusion about states’ enforcement authority, history has shown, “invites new insurance scams.”

Consumer groups broadly oppose the suggestion by DOL, via a “Request for Information,” that certain categories of AHPs could be exempted from state oversight. They argue that doing so would be contrary to Congressional intent, when it amended ERISA in 1983 to clarify states’ authority over AHPs. They further note that states have a far better track record than the federal government in responding to the long history of insolvencies and fraud that plague the AHP industry. “Any attempts to issue class or individual exemptions [for AHPs] would be an attack on the states and would only serve to fuel fraud and insolvency,” asserted CBPP.

Regulatory Impact Analysis

The consumer groups dispute DOL’s assertions in the proposed rule’s regulatory impact analysis. In particular, they are highly skeptical, due to the agency’s lack of evidence, of the claim that AHPs can offer “administrative efficiencies” to small businesses; rather, existing data suggest that AHPs simply duplicate the marketing and enrollment functions that commercial insurers already perform.

They further assert that the agency’s claim that it would be advantageous to allow small businesses to combine into large groups is fundamentally flawed. First, it is the ACA, not AHPs, that supports the pooling of small-group market risk through the single risk pool requirement. Second, by allowing AHPs to set different premium rates based on factors such as industry, age, and gender, the proposed would exacerbate market segmentation, not improve it: “To the extent that AHPs provide some small businesses and individuals with access to lower premiums, it would be as a result of market segmentation,” CBPP wrote.

A Note on our Methodology

This blog is intended to provide a summary of some of the comments submitted by a specific stakeholder group: consumer and patient advocacy organizations. This is not intended to be a comprehensive report of all comments from consumer groups on every proposal in the AHP rule. Future posts in this blog series will summarize comments from insurers, business associations, state insurance regulators, and other stakeholders. For more stakeholder comments, visit

Disclaimer: CHIR is part of a coalition that has submitted a Freedom of Information Act request asking DOL to release critical data and analysis that would support the agency’s capacity to adequately implement its proposed policies and protect consumers.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.