If a remedy ever comes, The Employers’ Association still wants to offer members an option for employee health coverage.
The association was all set this past spring to launch an association health plan. Partnering with insurer Priority Health, The Employers’ Association planned to offer HMO and point-of-service products to member employers, according to a filing with state regulators who approved the coverage last fall.
Then came a March 28 federal court ruling that struck down a 2017 executive order by President Trump and subsequent rules issued by the U.S. Department of Labor that broadened the ability of small businesses to join together to form association health plans.
“We ended up pulling that off the table after that result from the court,” said Jason Reep, president for The Employers’ Association, based in Grand Rapids.
The Employers’ Association stands among a handful of organizations in Michigan that had their plans scrapped by the federal court ruling. Reep still holds out hope for launching an AHP if an appeal turns out successfully.
That could occur if the Department of Labor prevails in appealing the ruling by U.S. District Court Judge John Bates of the District of Columbia. As well, Congress could enact legislation allowing the expansion of AHPs, or the Trump administration could issue new rules that comply with Judge Bates’ ruling.
“I’m hopeful that we will be able to find a way to provide the services that businesses in our community can benefit from. Whether that’s through appeal or some other transformation of how it might get provided, I’m hopeful in some way that we will be able to offer that again for businesses,” said Reep, who plans to “stay on top” of the issue.
“If there’s another solution that comes along that we can do something similar but maybe not identical, and it seems we would be able to provide that and offer that through a partner like Priority or whoever it might be, we’d be very interested,” he said. “However it happens and when it happens, we want to be ready to see if we can jump in to serve the businesses in the area.”
The Employers’ Association was among several organizations in Michigan caught up in the federal court ruling. Regulatory filings show Priority Health planned to partner with two physician groups, one in Grand Rapids and the other in Southeast Michigan, to form AHPs.
Blue Cross Blue Shield of Michigan and its HMO subsidiary, Blue Care Network, also intended to form an AHP with the Builders Exchange of Lansing & Central Michigan, according to a regulatory filing with the state.
Each of the planned AHPs remain on hold pending the appeal.
“Like many others, we are monitoring and awaiting the outcome and will adjust our activities in the market, should it be needed,” said Helen Stojic, director of corporate affairs and a spokesperson for Blue Cross Blue Shield of Michigan.
Priority Health still hopes to get into AHPs if the appeals court overturns Judge Bates’ decision or if some other pathway ever opens up to give small businesses another option to consider for employee health benefits.
“It’s definitely an area of interest,” said Diane Wolfenden, vice president of the health plan’s eastern region who was overseeing the AHP initiative.
“To the extent that we can put rates out there that are viable and provide alternatives and choice, it’s something we’re interested in doing. We want to give small businesses as many options as we can, especially in situations where it can provide a competitive proposal to consider,” Wolfenden said. “It’s not right for a lot of organizations, but we do think that there’s some opportunity there.”
Association health plans allow similar employers — those in the same trade, industry or profession, or based in the same geographical area — to come together to form a large risk pool of employees to insure.
In qualifying for large-group insurance coverage, the pool of small employers avoids some of the federal Affordable Care Act’s taxes, fees, regulations and coverage mandates that apply to small businesses, including requirements to offer 10 essential benefits in their health plans. A small employer’s location in the state, composition of its workforce, industry type and group size also matter in setting rates.
‘Waiting for a signal’
The Lansing-based Small Business Association of Michigan (SBAM) and Warren-based Michigan Business and Professional Association last October formed TranscendAHP, the first association health plan created in Michigan under the 2018 federal rules.
In its early months, TranscendAHP enrolled 440 small businesses across the state that account for more than 2,000 contracts with their employees for health coverage. Many of those contracts are with employees at small businesses that previously did not offer health benefits, said Rob Fowler, the president of TranscendAHP and CEO of SBAM.
Savings for small businesses enrolled in TranscendAHP have been “all over the board,” ranging from 5 percent to 7 percent of what they previously paid for some members, to as much as 30 percent to 40 percent for others, said Scott Lyon, senior vice president of small business services at SBAM.
“We are providing a real solution for 440 companies,” Fowler said. “It checks a lot of boxes in terms of a simple public policy priority: helping small business.”
Quoting and enrollment for TranscendAHP, which partners with Blue Cross Blue Shield of Michigan, has since been placed on hold, although coverage for existing employers remains intact through the end of 2019 or their contract term.
Whether employers can renew their coverage for 2020 depends on what happens next in the federal court case. As it stands now, they cannot renew their current plans.
“We are really waiting for a signal,” Fowler said. “Our question is can we renew the groups we have, and what will renewal look like, and is there an option for us to continue growing and building this AHP?”
In his decision, Judge Bates ruled that the president’s 2017 executive order was “intended and designed to end run the requirements” of the federal Affordable Care Act and “does so only by ignoring the language and purpose” of the law and the Employee Retirement Income Security Act that regulates health plans.
The Department of Labor’s appeal did not seek a stay, allowing the court ruling to take effect. The appeals court in Washington, D.C. agreed to hear the case on an expedited basis.
In a statement a month following the court ruling, the Department of Labor said it would “not pursue enforcement actions against parties for potential violations stemming from actions taken before the district court’s decision in good faith reliance on the AHP rule’s validity, as long as parties meet their responsibilities to association members and their participants and beneficiaries to pay health benefit claims as promised.”
SBAM’s Lyon sees four possible scenarios occurring: The appeals court upholds the lower court ruling and the Department of Labor rules are “dead in the water,” or it overturns the ruling “and at that point we can accept new companies.” The appeals court also could alter the 2018 rules, or “they could drag their feet in the court” and AHPs would need to ask the Department of Labor to extend its no-enforcement stance that runs out at the end of 2019.
“The problem is we don’t know when any of them are going to happen,” Lyon said.
Legislation was introduced in both the U.S. House and Senate to codify the 2018 Department of Labor rules into law and protect AHPs.
However, Fowler doubts the bills will move in Congress this year.
“This is caught up in the big health care debate. There’s no real consensus at the moment, and it’s almost inconceivable that they could do anything in time,” Fowler said.