Association Health Care Plans: Pros, Cons, And Everything In Between

When traditional US healthcare plans don't step up to the plate, association health care plans are a potential alternative worth exploring.

September 5, 2018
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Healthcare in the USA is a topic that is never far from the forefront of any vaguely political discussion about America. The approach that America has adopted to the provision of healthcare puts it at complete odds with the rest of the industrialized western nations of the world. Consequently, many workers in a number of professions have grown used to a near-constant anxiety over how they can ensure they maintain access to healthcare. Association health care plans (AHPs) can provide some respite to this situation for workers in many industries.

What Are AHPs?

An AHP is a type of healthcare plan which is available to groups of people who have what is known as a “commonality of interest.” This means that they work in the same geographic area as one another, or they belong to the same industry or profession.

For example, if you had a job in a kitchen, you could form an AHP with other people who also work in kitchens. In this way, you could put together an AHP that is tailor-made for your industry, meaning it will provide excellent coverage for the most common injuries suffered by kitchen workers, such as cuts, burns, and slips.

By allowing a group of people to enroll in the plan, the costs can be spread evenly among them. As the group grows, the cost to each individual will fall, and they will also have more negotiating power as a collective. Association health plans will be another option for small businesses that have been struggling to meet the cost burdens of ACA plans.

An AHP works just like having traditional health insurance, and most AHPs will be partnered with a larger, established healthcare provider and will use their network of doctors.

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Pros

The introduction of the Affordable Care Act (ACA) put an end to health insurers determining monthly premiums on the basis of risk characteristics like gender, age, and lifestyle. This was intended to make it possible for those in high-risk groups to still obtain affordable healthcare. Unfortunately, many insurers responded by charging all of their members as if they were high risk and using their healthcare heavily.

AHPs, on the other hand, have much more flexibility with their pricing. Monthly premiums can be set on an individual basis, meaning that they particularly benefit the young and healthy. It is also illegal for an AHP to set premiums according to protected characteristics such as race and religion, nor can they charge higher premiums or deny coverage to those who are already sick.

Another advantage of an AHP is that they are easy to join, regardless of your previous health care coverage. They also qualify under the ACA as minimum essential coverage. This means that there is no tax levied on you or your business for enrolling in one.

AHPs will be regulated in their home state, but in some cases, they are able to offer coverage to those in other states. However, a cross-state AHP can be complicated. There are federal regulations governing what form an AHP can take, while come states include their own stipulations regarding AHPs.

Cons

The way that AHPs are structured means that they will favor some groups of people over others. This is further complicated by the fact that every AHP is different. An AHP for people living in one area might offer fantastic coverage for prescription drugs, but not cover annual checkups as thoroughly. Meanwhile, a group of people in another area, who are of the same demographics, could have a plan that offers the exact opposite.

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Anyone who has a significant pre-existing health condition will find themselves fighting against the same forces that were prevalent across the health insurance industry prior to the passage of the ACA. This has led some people to question whether AHPs will slowly hoover up all of the relatively young and healthy members of the population, leaving the sick, elderly, and infirm to seek coverage from ACA plans. What this could mean in the long term is uncertain.

Finally, it should be noted that policy experts have been very critical of AHPs. While Donald Trump’s administration has sought to talk them up as an excellent alternative to what they see as the more oppressive consumer-friendly regulations stipulated by the ACA, there are serious concerns from the medical industry itself, and from those experienced in formulating healthcare-related policies.

There are definitely both strengths and weaknesses to the AHP. Ultimately, they seem to be carrying on the tradition of the US health insurance market to provide some people with excellent coverage, and others with scant coverage. If you are younger, healthier, and you are self-employed or own a small business, you could potentially benefit greatly from an AHP. Those with pre-existing conditions or who belong to high-risk groups will probably be better served by ACA plans.