Association health plan proposal: Experts wary of weak consumer protections, oversight issues

stethoscope, coins and calculator

The new proposal to expand association health plans promises to provide more affordable insurance options for small-business owners and employees. But some experts aren’t convinced that this is the right solution.

For one, the proposal’s promises of consumer protections aren’t as strong as they seem, said Timothy Jost, a Washington and Lee University professor emeritus who closely follows the ACA.

Association health plans can’t charge higher premiums or deny coverage based on health status, according to the Department of Labor (DOL). But because AHPs would be subject to large-employer market rules, they wouldn’t have to cover the list of essential health benefits that the Affordable Care Act mandates.

The upshot, Jost told FierceHealthcare, is that insurers could legally weed out those with costly conditions while still complying with regulations that bar them from denying those individuals coverage or hiking their premiums.

“If you can’t exclude someone because they have cancer, it’s easy to just not cover chemotherapy,” he said. “Or if you can’t exclude people who have mental illness, it’s easy to just not cover mental health care.”

And Larry Levitt, senior vice president of the Kaiser Family Foundation, pointed out in a Twitter post that insurers could still hike premiums based on factors other than health status:

 The association health plan regulation prohibits variation in premiums based on health. It does not prohibit premium variation based on any other factor, such as gender, age, industry or occupation, or business size.
 Cherry-picking enrollees

Association health plans are also likely to be marketed toward the healthiest, youngest individuals, Jost noted.

“I doubt anybody is going to be out there writing association coverage for occupations that are predominantly people who are older or have chronic health problems,” he said.

The problem, then, is that AHPs would siphon more low-risk consumers out of the individual marketplaces—thus skewing that risk pool and likely causing insurers to raise premiums.

“I think everybody understands that this is going to undermine the market for ACA-compliant plans,” Jost said.

Andy Slavitt, the former Centers for Medicare & Medicaid Services acting administrator, laid out his own criticisms in a Twitter thread—including pointing out that breaking up risk pools goes against the proposal’s stated purpose of giving small businesses more clout:

 The regulation aims to push the idea of what can be considered an association.

Someone I talked to today referred to it as being able to create an “air breathers association.” Essentially, making it as rude-less as possible.

 Many of the premises of AHPs have been shown not to work in the past.

For example, the rule says AHPs will create “increased buying power”. Breaking up pools does exactly the opposite.

Instead, a “Runners’ Association” just sends a clear signal that these are healthy people.

Limited impact

Merrill Matthews, Ph.D., a resident scholar at the right-leaning Institute for Policy Innovation, praised the new proposed rule, noting that it allows small businesses to do what large employers have long been able to: self-insure.

“Self-insured employers have been able to avoid many of the state and federal mandates imposed on the small group and individual markets, which helped employers keep down the cost of coverage,” he said.

But even Matthews acknowledged that the impact of the proposed policy changes is likely to be limited, as it will only apply to small employers and possibly some self-employed individuals. Since the proposed changes are “unlikely to provide much relief” for those affected by high premiums in the individual market, he said, “Congress still needs to repeal the Affordable Care Act.”

Questions about oversight

Perhaps the biggest issue that Jost saw with the new proposal was the fact that AHPs have had past issues with insolvency, bankruptcy and even fraud.

“There’s just a long history of association health plans being formed that are thinly capitalized, that pay large salaries and expenses for their owners, and disappear when the going gets rough,” he said.

For its part, the DOL said it will “closely monitor these plans to protect consumers.” But Jost pointed out that the agency has experienced staff and budget cuts that might undermine that goal.

Even the DOL itself said in the proposed rule that “the flexibility afforded AHPs under this proposal could introduce more opportunities for mismanagement or abuse, increasing potential oversight demands on the department and state regulators.”

Ultimately, what plays out will largely be decided by how states respond to the new regulations once they are implemented, Jost added.

“In states that try to take an aggressive approach to regulating them, there won’t be that much activity,” he said. “And in states that take a hands-off approach and let anything go, there will be probably quite a bit of activity until [AHPs] start going belly up.”


Apple explored buying a medical-clinic start-up as part of a bigger push into health care

Image result for Apple

  • Apple’s health team was until recently deep in talks to buy Crossover Health, the venture-backed start-up that runs its on-site medical clinic.
  • It’s not clear if Apple wanted to own and operate a network of health clinics, like its retail stores, or simply partner to sell products with a health-related angle, like the Apple Watch

Apple has considered an expansion into health care clinics, and had talks to buy a start-up called Crossover Health, which works with big employers to build and run on-site medical clinics, according to three sources familiar.

Crossover Health is one of a small number of companies that specialize in working with self-insured employers to provide medical and wellness services on or near to campus. Among its clients are Apple and Facebook.

Crossover also has clinics in New York and the Bay Area, and touts its digital features like same-day appointments via a mobile app.

The Apple-Crossover talks went on for months but didn’t materialize into a deal, one of the sources said. Apple also approached nationwide primary care group One Medical, said two other sources.

Crossover Health did not respond to a request for comment. Apple declined to comment.

The discussions about expanding into primary care have been happening inside Apple’s health team for more than a year, one of the people said. It is not yet clear whether Apple would build out its own network of primary care clinics, in a similar manner to its highly successful retail stores, or simply partner with existing players.

It’s also possible Apple will just decide not to make this move.

Some experts see a move into primary care as a way to build out its retail footprint. Apple’s worldwide network of more than 300 stores has been one of its most important sales channels.

Canaan’s Nina Kjellson, a prominent health tech investor who has no knowledge of Apple’s plans, believes the move is plausible. “It would help build credibility with Apple Watch and other health apps,” she explained.

“Apple has cracked a nut in terms of consumer delight, and in the health care setting a non-trivial proportion of satisfaction comes from the quality of interaction in the waiting room and physical space,” she continued.

Richard Milani, chief clinical transformation officer at Ochsner Health System in New Orleans, which was one of the first hospitals to use the Apple Watch as a patient health monitoring tool, agrees it might make sense.

“Such a move wouldn’t surprise me as Apple has demonstrated that its interest in health care isn’t superficial,” said Milani. “Primary care is in great need of re-imagining and rethinking.”

Apple has a lot of health-related projects going on

Apple is expected to make a big move into health care in the coming years. CEO Tim Cook has said recently that he sees health as a “business opportunity,” rather than a philanthropic endeavor.

“There’s much more in the health area,” he said in an interview with Fortune. “There’s a lot of stuff I can’t tell you about that we’re working on, some of which it’s clear there’s a commercial business there.”

In the U.S., the demand for primary care services is outstripping the supply of physicians. According to some estimates, there could be a shortage of up to 35,000 primary care doctors by 2025.

In recent years, Apple has hired dozens of doctors, health consultants and other medical experts, working on campus. As CNBC recently reported, it scooped up Stanford’s rising star in digital health Sumbul Desai for a senior leadership role.

Apple is working with the U.S. Food and Drug Administration on finding better ways to fast-track digital health software through the regulatory approval process. It is also partnered up with researchers at Stanford to determine whether the Apple Watch is accurate and sensitive enough to be used as a tool to screen for a heart rhythm disorder known as atrial fibrillation.

It has other research and development projects, including a teamworking on a sensor to non-invasively and continuously track blood sugar levels.

The company is also working to make the iPhone the central repository for patient health information. Already, it has developed software tools for health developers to make it easier to recruit patients for clinical studies (ResearchKit) and share health information with third-party developers with consent (HealthKit).


Health care fixes miss the mark


The phrase “repeal and replace Obamacare” might be in the news, but any new legislation regarding it means little for Michiganians.

Obamacare and the Republicans’ fix, the American Health Care Act, are almost entirely focused on the individual insurance market, yet the majority of Americans receive employer-sponsored health insurance coverage. More importantly, more than one million Metro Detroiters are covered by employers who “self-fund” or self-insure their employee health care benefits.

What does self-insure mean? It means your employer pays, right out of its annual budget, 100 percent of employee medical claims. Your card might read Blue Cross Blue Shield or Aetna, but the insurance company is simply the administrator who collects the claims and sends them off to your employer for payment.

Regardless of who is paying, rising health care costs are the No. 1 threat to American prosperity. Health care costs forced General Motors, Chrysler and the city of Detroit into bankruptcy; health care costs are the main reason wages have not grown in 20 years; and, Michigan spends 40 percent (and growing) of its annual budget on health care — crowding out spending on everything else.

But fixing our health care cost problem today doesn’t require a single action from Congress. Instead of marching on Washington and yelling at elected officials, we should be talking to our CEOs and heads of human resources.

Self-insured employers have tremendous power to change health care. Most employers simply outsource health care benefit construction to consultants and brokers — the same people who are compensated to perpetuate our high-cost health care status quo.

When the lame, status quo attempts at cost-control fail, the usual employer response is to cut, cut, cut. They resort to using an axe to prune rose bushes; high deductible health plans are blunt force instruments that do not sustainably control health care costs and will eventually exacerbate our cost problem.

Indeed, a few, truly innovative employers are providing better employee benefits and reducing health care costs 20-50 percent. If everyone followed their lead, it could result in $2,500 to $5,000 annual raises for each of us and immediately pump $2 billion to 4 billion into the Metro Detroit economy every year.

The solution isn’t a secret. In fact, a non-profit/501(c)(3) called the Health Rosetta was formed to publicize the simple fixes. The organization was spurred by a concerned citizen and the former global head of Microsoft’s health care business named Dave Chase.

The Health Rosetta identifies a few, easy to implement, specific improvements, the most important of which focuses on the intake or front-end of the system: primary care. Hence, the Health Rosetta’s foundation is called Value-Based Primary Care or Direct Primary Care. Other improvements are then built on top, such as “Transparent Medical Markets,” where patients receive up-front pricing and even quality guarantees on a range of surgeries and procedures.

These are the kinds of solutions employers should be considering as everyone wrestles with skyrocketing health care costs.

Tom Valenti is the founding partner of Forthright Health.