Association Health Plans (AHP) are back, Those of you of a certain age will recall the glory days of Multiple Employer Welfare Arrangements (MEWAS) and who can forget phony Employee Leasing (EPO). Well, should recent Trump administration executive orders come to fruition, stand by for the next wave of questionably financed, poorly regulated and ridiculously administered group purchasing co-ops. But it does not have to be that way
The good news is this, done properly the emergence of group purchasing cooperatives, dressed up as AHP’s, (if) sponsored by well-financed and experienced professionals, can be a welcome option in the marketplace, one that has been increasingly wedged into cookie-cutter plan designs, misleading promotion and massive adverse selection. This is been particularly impactful for small businesses and sole proprietors.
What are the advantages of such an approach? First and foremost, associations could now be formed for the sole purpose of purchasing insurance products, this was always forbidden in the past. Secondly these plans can extend beyond state lines and likely regulated under ERISA rules, rather than by individual states. Lastly, by eliminating strict ACA Essential Benefit requirments, plans can be taylored to the needs of a particular group or affininty organization. As a cost savings, group buying power would most certainly reduce administrative expenses, create leverage for negotiating premiums and allow the necessary flexibility the market needs to serve the array of differing employee populations.
Direct Primary Care (DPC) More Cost Effective Delivery
Additionally, we predict the emergence of new and creative clinical delivery systems, in particular the so-called Direct Primary Care Model (DPC). This direct provider contracting strategy allows groups of employers to direct their workers to designated local clinics, these clinics deliver high-quality pre-negotiated rates and covered services. DPC networks can grow in direct proportion to the location and growth of the AHP. In these cooperative arrangements (DPC/AHP) much of the risk is transferred from the carrier/sponsored insurer to the providers of care, resulting in much greater managment and control of costs.
Creative Health Plan Financing
New healthcare financing models (actually these have been around for some time) such as the Hospital Indemnity, or Defined Benefit when placed on a group chassis, will allow for more affordable first dollar access to both outpatient primary care and short stay hospital (maternity). This fixed indemnity model tends to work far better than traditional (80% 20% with deductible) in the hourly service employee sector.
All things considered, should Association Health Plans become a reality, diligent care should be taken in evaluating the sponsors, as historically this has been a breeding ground for fraud and financial mismanagement. Either way, we plan on being in the game, ready to help and advise.
For more information. Hammett Insurance Services: 619-301-7460