Rand Paul Group Association Plans

[SamIam]

I heard from someone that Rand Paul's idea for the individual market is to move everybody to group association plans. Two questions I have why don't they just model the individual market like the group if you had coverage pre-x won't matter and if not they have a 12 month or 24 month pre-x waiting period.

As far as the group association goes if they move towards that direction how would that affect the agent, would that be a system where were cut out.

 

[Ann H]

Association plans work for a short-time. Later, they suffer the same adverse selection as the younger/healthier folks leave when rates increase, and the sicker/older folks stay. Association plans do not have built-in controls like group insurance, where you have to be employed in order to get the coverage, and the employer must enroll a certain percentage of the group.

Waiver of pre-ex wait with prior creditable coverage is a valid way to control adverse selection, and it has been suggested in several of the recent repeal/replace bills.

 

[somarco]

In the 70's and a little later association/trust plans were prevalent. Easy way to enter a market in multiple states via deemer provisions.

Some were successful for a number of years, others blew up in short order.

There is nothing inherently wrong with these MEWA's but poor management and greed seems to kill them off eventually.

The most successful plans were offered by BFAW (later Corroon & Black). The "net" plans (Red Net, Green Net & Black Net) offered true group coverage via a self funded trust with reinsurance. They may have had a 1 life plan but I believe they started at 3 or maybe 5 lives.

Ted Miller was an actuary that worked for BFAW where he started and managed the plans for years. When Ted left to set up his own underwriting firm his successor ran it in the ground.

There were other successful association MEWA's in Georgia & Florida for auto dealers and truckers. Also one in Alabama that (as I recall) didn't have any affinity relationships. It lasted for several years as a self funded plan until the state required them to go fully insured. The other MEWA's were also self funded and did well until MEWA became a dirty word.

The FL Auto Dealers and GA Auto Dealers were very successful until govt interference shut them down. The FL Auto Dealers ran on very tight margins, paying out slightly over 90% and running the admin in the 6 - 8% range.

Another MEWA was the FL Auto Parts Association. Mom & pop stores around the state. This one also was forced to close down when the state said they had to go fully insured and they could not find a carrier willing to offer their paper and assume the risk.

 

[SamIam]

For those who are familiar with these would these group association plans brokers could market?

 

[somarco]

Some of the associations mentioned above used brokers, some did not

 

[RayNY]

Association plans do not have built-in controls like group insurance, where you have to be employed in order to get the coverage, and the employer must enroll a certain percentage of the group.

You just make membership by company instead of individual and cover all those actively at work as supported by tax docs.

My association has exclusive dental/vision/life/ad&d/hospital indemnity plans in place already, we're excited for the potential to get our own health products again.

 

[Ann H]

Bob mentioned association plans for groups, as a MEWA (Multiple Employer Welfare Arrangement). Likewise, Ray mentioned association plans for groups, noting that they must insure all of their employees as supported by tax documents. Both of those are employer group plans, through an association.

That's a totally different concept than association plans for individuals that is being considered right now in Congress.

 

[RayNY]

Ann,

We'll have to see what actually gets put into law. From what I see, allowing individuals to get plans through an association does not require every association to offer plans, nor does it require an association to accept individuals as members. If the laws allow an association to obtain a health plan by rating members as a group, that's really all I need. We just "underwrite" by restricting membership.

We've done it before, on a grand scale, and I'm confident we can find a way to do it again.

 

[Ann H]

Ann,

We'll have to see what actually gets put into law. From what I see, allowing individuals to get plans through an association does not require every association to offer plans, nor does it require an association to accept individuals as members. If the laws allow an association to obtain a health plan by rating members as a group, that's really all I need. We just "underwrite" by restricting membership.

We've done it before, on a grand scale, and I'm confident we can find a way to do it again.

That works. I don't know if Congress is going to do that or not, but group plans work, whereas association IFP plans are really just IFP plans. I hope for your sake and the sake of New York Residents that they allow it.

 

[somarco]

Several professional groups still have association plans that don't have underwriting or participation requirements. The GDA (Ga Dental Assoc) comes to mind. There is also one for Psychotherapists that allows Psychologists, Psychiatrists, Social Workers and possibly other related counselors.

Rates are nothing to write home about, at least they weren't prior to 2014. Haven't paid much attention to them since 2014.

My former dentist had a partner and maybe 8 staff people including office, dental assistants, hygienists. Out of the 10 employees only the two dentists had coverage. Both were active in GDA so their choice may have been more political than liking the coverage vs other options.

Professional (white collar) associations are easier than trade associations. Some of the biggest abusers have been tied to the home building trades. The joke was, if you had ever seen a house you could get health insurance through the association.