Association Health Plans can be great but Caveat Emptor

This week has seen a number of articles that have focused on the recent Trump Administration announcement regarding Association Health Plans (AHPs).  This Monday, June 25th, The Virginian-Pilot published an article entitled, Buyer Beware: Inexpensive Health Plans Often Not What They Seem.  This piece is similar in tone to comedian John Oliver’s expose on addiction treatment centers on HBO’s Last Week Tonight.  Both pieces raise very important points about their respective topics.  In the case of Oliver’s piece, the message was that addiction treatment centers are dangerously unregulated and he showed examples of misconduct and fraud.  The Virginian-Pilot also talked about the past failings of AHPs showing at best some shady offers and at worst outright fraud.

I’d like to say that I am an avid viewer of Oliver’s and find his work to be both entertaining and informative but like ALL things, he has a lens through which he looks at the world.  In the case of addiction treatment centers, he talks about the bad actors and the lack of regulation and the people that were harmed.  I re-watched the segment before posting this entry to be sure of my next comment.  Oliver spends a little more than 19 minutes dissecting the industry, identifing its short-comings.  One study he cites is from 2012, which seems recent but is also, at the same time, six years old.  I’m not saying that the industry is without trouble, it most certainly still has bad actors but neither is it without redeeming qualities.  Take for example Lionrock Recovery – they run a digital health platform that provides intensive outpatient treatments using video-conferencing tools.  They do track and report on performance and have documented actual success rates.  To be fair, they are a single example but there were no bright spots in Oliver’s presentation so I wanted to offer at least one.  In a country with more than 20 million people struggling with substance abuse and fewer than 1 in 10 actually seeking treatment, productions like Oliver’s can have a chilling effect on people seeking the help they need, further reducing the good that is being done by the treatment centers that are helping people.

I admit, The Virginian-Pilot isn’t on my daily reading list but has been reporting the news for in form or another since 1865 and has been voted the #1 newspaper in Virginia for 28 of the past 35 years.  That said, the article was a re-post of an article by Sarah Gantz of The Philadelphia Inquirer.  Gantz’s portrayal of AHPs is a little lopsided in my opinion.  Gantz provides examples of AHP fraud in the past and clearly, there are still plans operating today that are seen as questionable.  Does that mean that all AHPs are bad?  Of course not.  What it does mean is that we should understand what it is we’re buying and if we do not feel that it can easily be understood, consult with a trusted source.

Let’s go back to Oliver’s piece and a point that he and I agree on.  Trusted sources are hard to come by these days.  It takes a lot to find a single source that is free from bias and conflict.  What do we do then if a trusted source is hard to come by?

Give up?

Regardless of the availability of quality, unbias data, I do take issue with consumers that cry foul when they see something for 90% less than everything similar on the market, purchase that thing and then realize that it’s not what they “thought” it was.  Or, consumers that are called on the phone and told that if they join this group and send a small monthly payment they are guaranteed to save many times the amount sent each month.  This is the scenario that Gantz describes in her article.  Honestly, when has that ever worked out?  It doesn’t.  I have zero examples, personal or otherwise of spending $25 to save $150 every month.  That’s because, in my opinion, that just doesn’t make sense.  If it was that easy, everyone would do it.

AHPs can, under the new rules, carve out specific services that they do not feel are required by their membership.  Some will choose not to carve out anything, some will choose to carve out some things and further still, some will carve out a lot but it is ultimately up to the consumer to understand what it is they are buying.

What I was hoping for in Gantz’s coverage was more information on how AHPs can provide lower cost insurance but she chose to focus on one option – reducing benefits.  There are other options.  One such option is to pool risk and self-insure.  Under the new rules, associations will be able to offer self-funded insurance plans starting April 1, 2019.  A self-funded plan can also choose what essential coverages it offers but more importantly it is underwritten.  In other words, instead of relying on national actuarial tables for all people of a certain age, associations will be able to assess the specific risk of their members which can often result in significant savings.  They can employ reimbursement strategies like referenced-based pricing.  Reference-based pricing provides a maximum reimbursement for a procedure.  You can then go wherever you like to have the procedure performed.  You work with the provider to understand the price in advance and if the price is less than the reimbursement level, the procedure is covered 100%.  If it’s greater than the reimbursement level then you can choose to pay the difference or seek another provider.  These options are just a small sampling of those available under the rules and I’ve grossly over-simplified them, but they are out there and focusing solely on cost-reduction through reducing essential benefits is not balanced reporting in my opinion.

Identifying a trusted source for AHP information will be an important industry step and I, along with several of my colleagues have begun conversations aimed at providing just that.  Stay tuned, over the coming weeks and months we will be launching and expanding the AHP Info Center at where you will be able to find all the information about association health plans from the rules themselves, to helpful executive summaries, updates on additional guidance and eventually, information about specific AHPs as we learn about them.  AHP Info Center will be the independent source for all your AHP questions.

In conclusion, I invite our journalists and comedians alike to spend a little more time focusing on the good side, if any, of the story they’re covering.  I also invite the consumer to look beyond the first story they read and really explore the topic.  As always, I look forward to your thoughts and comments.