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Farm Bill Funding for Association Health Plans Could Weaken Coverage, Raise Costs

The pending House farm bill authorizes up to $65 million to help agricultural organizations set up association health plans (AHPs) to cover their members. But expanding AHPs could lead to higher premiums and reduced choices in other insurance markets that serve farm workers and their families. And many agricultural workers who lack health coverage would be better off seeking more affordable and comprehensive coverage elsewhere.

AHPs are health plans that professional or trade groups offer to their members. Congress is considering providing seed money for agricultural AHPs in the farm bill just as the Trump Administration is considering finalizing proposed rule changes that would roll back a number of federal limits on AHPs. The proposed rules, if finalized, would make it easier for groups to form AHPs and effectively exempt AHPs with small business and individual members from many standards and consumer protections that would otherwise apply.

For example, if the federal rules are finalized, AHPs covering individuals and small groups would not have to cover the Affordable Care Act’s (ACA) list of essential benefits, so they could — and likely would — exclude or sharply limit coverage of benefits such as mental health care, substance use disorders, and prescription drugs. And, AHPs could charge sharply higher premiums based on age (a practice the ACA restricts in the individual and small-group markets) or base premiums in part on characteristics such as a person’s occupation or gender.

Because AHPs could operate under weaker consumer-protection standards, they would be able to charge lower premiums to healthier individuals and small groups, and lure them away from the insurance markets that typically serve them. If enrollment in AHPs is significant, this would likely push up premiums in those other markets, raising costs for people who want more comprehensive coverage or who can’t access cheaper plans in the shadow markets, such as people with pre-existing medical conditions.

The farm bill provision would use federal resources to subsidize these types of plans. For example, the Nebraska Farm Bureau is working to develop an AHP for “certain qualifying members” and has written in support of the proposed federal rule changes to AHPs. Under the farm bill provision (initially proposed by a Nebraska congressman, Rep. Jeff Fortenberry) the Nebraska Farm Bureau and other “qualified agricultural associations” could apply for a grant or loan from the Secretary of Agriculture to help set up and operate a group health plan for members. The $65 million would be available for four years under the proposal.

The AHP concept has a lot in common with other recent proposals to create shadow markets of skimpier plans, as a way of getting around the ACA’s consumer protections — especially those that require insurers to offer comprehensive benefits and protect consumers with pre-existing conditions from discrimination and high out-of-pocket costs. These skimpy plans include so-called “short-term plans,” which could offer coverage lasting nearly a year under proposed federal rule changes, and legislation enacted in Iowa that permits the Iowa Farm Bureau to offer health plans that are entirely exempt from insurance standards and yet are expected to enroll thousands of Iowans as soon as this year.

Proponents of AHPs and other “alternative” health coverage options frequently bill them as a solution for people who purchase health coverage on their own but have incomes too high to qualify for premium tax credits and other subsidies through the ACA marketplaces. (The premium credits are available to people up to 400 percent of the federal poverty level, which comes out to roughly $48,000 for an individual and $98,000 for a family of four.) But people who can get a cheaper premium with an alternative plan can find themselves exposed to large costs if they get sick, and expanding such plans raises premiums for unsubsidized people who need comprehensive coverage.

Moreover, many agricultural workers who lack health coverage have incomes much lower than this level — 58 percent have incomes less than 200 percent of the poverty level (or $49,000 for a family of four), according to a CBPP analysis of Census data. Some of those workers are likely stuck in the “coverage gap” because they live in states that haven’t expanded Medicaid (such as Nebraska). Indeed, in Medicaid non-expansion states, 55 percent of agricultural workers with incomes below the poverty line (or about $25,000 for a family of four) are uninsured.

Many other agricultural workers and their families could likely access comprehensive and affordable coverage via subsidized marketplace plans or Medicaid. But they may need more information about these options, as well as help applying for financial assistance and enrolling in coverage. Unfortunately, the $65 million earmarked for AHPs in the farm bill surpasses the total amount the Trump Administration spent on outreach and navigator funding grants for in-person assistance in 2017 to help people, including agricultural workers, understand and access health coverage.