Competition and choice were two promises of the Affordable Care Act that have largely been unfulfilled. Will Association Health Plans be the flavor of the month and quickly vanish like the healthcare co-ops, or will they create a viable pathway to lower cost, more administratively efficient health insurance?
Health Plan Associations have the opportunity to be nimbler than a large insurance company. They can tailor benefits and services to their target audience. Smaller employers can access the best-in-class solutions that may previously have been available only to large employers in these associations. Premiums can be stabilized and become more predictable by utilizing the actuarial law of large numbers. Lastly, association health plans can put market pressure on existing insurance solutions through increased competition for business. The list of potential benefits is both attractive and numerous.
However, the opportunity does not create an automatic result. George Washington is credited with saying, “It is better to be alone than in bad company.” The road to destruction in healthcare is historically strewn with entities that believed bigger is better. In health insurance, better is better.
Assembling groups of individuals and employers together using the same market solutions that are available today will not result in a better outcome. Associations that creatively connect groups together to improve the health risk and the quality of care will be the winners. The Association Health Plan decision recently announced by the United States Department of Labor will unlock the door of opportunity to expand the use of associations across the U.S., but the success of such plans relies on the ability of association administrators to innovate and think both creatively and intentionally.
Jeff Kirke is vice president of Employee Benefits in the Scottsdale office of Holmes Murphy, privately-held insurance brokerage.