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After Republican Senators Lamar Alexander, Michael Enzi, Rand Paul, Mitch McConnell, Orrin Hatch, John Cornyn, John Thune, Roy Blunt, John Barrasso, Joni Ernst, Chuck Grassley, Ron Johnson, James Inhofe, Deb Fischer, John Boozman, Johnny Isakson, Bill Cassidy, Marco Rubio, Shelley Moore Capito, James Lankford, Steve Daines, Roger Wicker, Tom Cotton, Dan Sullivan, Todd Young, John Kennedy, Richard Shelby, Dean Heller, Richard Burr, and Tim Scott urged the Trump Administration to hurry up and sabotage health care even faster, Protect Our Care Campaign Chair Leslie Dach said:

“At a time when Republican Senators should be standing up to the Trump Administration’s threat to strip protections from 130 million Americans with pre-existing conditions, they are instead urging the Administration to commit more sabotage, faster. Today, 30 Republican senators asked Trump to fast-track an expansion of association health plans, which fail to provide real coverage because they can exclude or limit basic services such as prescription drug coverage, mental health care, and maternity care. Before the Affordable Care Act, this type of plan had a long history of fraud and unpaid claims, and many states still exempt them from key consumer protections. When these plans fail, they leave people who thought they had real coverage out in the cold – which is where millions of Americans will find themselves if the Trump Administration and these irresponsible Senators have their way.”

INSURANCE COMMISSIONERS AGREE THAT ASSOCIATION HEALTH PLANS ARE BAD FOR CONSUMERS

National Association of Insurance Commissioners: Association Health Plans Are Bad For Consumers. “AHPs would fragment and destabilize the small group market, resulting in higher premiums for many small businesses…AHPs would be exempt from state solvency requirements, patient protections, and oversight exposing consumers to significant harm.” [NAIC]

Pennsylvania Insurance Commissioner Concerned About Potential For Consumer Harm Under AHPs. “The proposed rule would also loosen existing commonality of interest requirements to allow associations to form simply based on membership in the same trade, industry or profession..If a self funded MEWA were permitted to form in a neighboring state and to sell to Pennsylvania association members under the metro area provision, Pennsylvania regulators would not have the ability to assist a Pennsylvania resident if problems arise with the other state’s association, including claim denials, or, worse yet, in the event of insolvency or fraud.” [PA Insurance Commissioner Jessica Altman, 3/6/18]

California Insurance Commissioner: “The Proposed Rule Is A Perfect Storm Of Bad Ideas.” “The AHPs proposed by this rule will harm consumers by degrading the individual and small group health insurance markets through adverse selection, and will impinge upon states’ rights while opening the door to fraud, insolvency and abuse…The proposed rule in no way limits the ability of states to regulate MEWAs, insurers offering coverage through MEWAs, and insurance producers marketing that coverage to employers. However, the checkered history of MEWAs instructs that unscrupulous actors will try and exploit any change which can be mischaracterized as constituting ERISA preemption.” [CA Insurance Commissioner Dave Jones, 3/6/18]

PATIENT GROUPS, HOSPITALS, AND KEY HEALTH STAKEHOLDERS CONDEMN AHPs

American Cancer Society Cancer Action Network: “We Are Also Concerned About The Proliferation Of AHPs Because Of Their History Of Fraud And Financial Instability.” “For a long time, these products were not traditionally subject to the same state insurance solvency and licensing requirements that allowed regulators to maintain necessary oversight.5 If an AHP lacked the financial resources to pay claims, then enrollees were left with no coverage and high out-of-pocket costs. Even in cases of well-meaning AHP sponsors, insolvencies led to millions of dollars in unpaid claims.” [ACS-CAN, 3/6/18]

American Hospital Association: AHPs “Ultimately Decreas[e] Access To Affordable Coverage.” “We are concerned that this rule fails to protect against discriminatory insurance practices and could contribute to instability in the individual and small group market, ultimately decreasing access to affordable coverage.” [American Hospital Association, 3/6/18]

Coalition Of 118 Patient And Community Organizations Urges Department Of Labor To Reconsider AHPs. “We believe that the proposed changes would negatively impact access to quality, affordable care for consumers, disrupt the individual and small business marketplace, and further strain the limited resources of state regulators…The intent of the President’s executive order was to increase consumer choice while curbing costs, however we believe that AHPs as proposed would invariably weaken the individual and small group markets leading to higher healthcare costs for all; higher premiums for those who stay in the marketplace, and high out of-pocket costs for those who are covered by AHPs for unexpected medical needs.” [Coalition Of 118 Patient And Community Organizations, 3/6/18]

AHPs ARE HOTSPOTS FOR FRAUD IN STATES:

Florida

A Labor Department Lawsuit Revealed An AHP Had Concealed Financial Problems And Left $3.6 Million In Unpaid Claims. “The Labor Department filed suit last year against a Florida woman and her company to recover $1.2 million that it said had been improperly diverted from a health plan serving dozens of employers. The defendants concealed the plan’s financial problems from plan participants and left more than $3.6 million in unpaid claims, the department said in court papers.” [New York Times, 10/21/17]

In Florida, A Man Pleaded Guilty To Embezzling $700,000 In Premiums From the AHP He Ran in 2004 To Help Build A Home For Himself And Was Sentenced To 57 Months In Prison. “A Florida man was sentenced to 57 months in prison after he pleaded guilty to embezzling about $700,000 in premiums from a health plan that he had marketed to small businesses. The Labor Department and the Justice Department said he had used some of the plan premiums to build a home for himself.” [New York Times, 10/21/17]

In 2004, A Florida Woman Was Left With $500,000 In Unpaid Medical Bills While She Was Covered By Association Health Plan. “Joan Piantadosi, a small business owner bought health insurance from Employers Mutual LLC through an association for herself, her family, and her employees. She was left with more than $500,000 in unpaid medical bills for her husband’s treatment during the time she was covered by Employers Mutual LLC. On top of that, her husband needed a liver transplant to live. In her own words, “[W]e were informed that since we lacked insurance coverage, we would have to pay a deposit of $150,000 before my husband could enter the hospital’s Liver Transplant Inpatient program. We simply did not have $150,000 to cover the deposit. Consequently, my husband was removed from the recipient list…We feared, among other things, that my husband might die while we were attempting to deal with the predicament of being uninsured despite having paid premiums to what appeared to be a legitimate health insurer.” [United Hospital Fund, 3/6/18]

Louisiana

In Louisiana, Two People Pleaded Guilty To Using Money From The AHP For Spa Treatments, Diamond Cuff Links, Foreign Travel And Other Personal Expenses. “And in Louisiana, two people pleaded guilty to conspiracy charges after the government found that they had taken money from the medical benefit fund of a trade association and used it to pay for spa treatments, diamond cuff links, evening gowns, foreign travel and other personal expenses.” [New York Times, 10/21/17]

Texas

In Texas, Patients Thought They Were Insured Until Told Otherwise In A Moment Of Crisis. “Robert Loiseau, who represented fraud victims in Texas, recalled their shock when they tried to receive care. ‘People bought insurance coverage because it was cheap and seemed to provide them with coverage they needed,’ he said. ‘It had a veneer of legitimacy. But when they went to the doctor, they found out all of a sudden that their insurance company, their perceived insurance company, was in receivership and that they had no coverage.’” [New York Times, 10/21/17]

Between 2001 And 2003, Texas Shut Down 129 Unauthorized Insurance Operations. “In the last two years, the Texas Insurance Department shut down 129 unauthorized insurance companies, affiliates, operators, and their agents whose illegal actions affected more than 20,000 Texans.” [The Commonwealth Fund, August 2003]

New Jersey

In 2002, An AHP Became Insolvent With $15 Million In Outstanding Claims. “For example, when a long-standing AHP in New Jersey that covered 20,000 people became insolvent in 2002, it had $15 million in outstanding medical bills. This left participating businesses and their employees’ claims unpaid even though employers paid premiums to the AHP.” [Commonwealth Fund, 10/10/17]

A Health Plan For New Jersey Small Businesses Collapsed With $7 Million In Unpaid Claims. “In another case, a federal appeals court found that a healthplan for small businesses in New Jersey was ‘aggressively marketed but inadequately funded.’ The plan collapsed with more than $7 million in unpaid claims.” [New York Times, 10/21/17]

South Carolina

In South Carolina, A Man Pleaded Guilty To Diverting Nearly $1 Million From An AHP For Churches And Small Businesses, Leaving $1.7 Million In Unpaid Claims. “A South Carolina man pleaded guilty after the government found that he had diverted more than $970,000 in insurance premiums from a health plan for churches and small businesses. ‘His embezzlement and the plan’s consequent failure left behind approximately $1.7 million in unpaid medical claims,’ the Labor Department said.” [New York Times, 10/21/17]

Across State Lines: North Carolina, Maryland, And Beyond

One AHP Scheme Shows How AHPs Can Move From State To State.Families USA chronicled an AHP scheme involving the American Trade Association, Smart Data Solutions, and Serve America Assurance. They found:

• “Even after one state identifies a problem, the company may continue to operate for years in other states. North Carolina issued a cease and desist order to stop many of the players in this case from selling insurance in 2008.”
• “But by June 2010, when Maryland issued a cease and desist order, the plans sold by these players had been identified in at least 23 states.„ Estimates of total premiums paid to these companies for unauthorized, unlicensed plans range from $14 million to $100 million.”
• “This particular scheme operated through associations that went by many different names. (At least one of the players in this case was involved in a previous case concerned with fraudulent insurance sold through an association of employers in 2001-2002.)”
• “Consumers are often ill-protected when they buy coverage through an association, and the web of relationships among salespeople, associations, administrators, and actual insurers can be difficult for regulators to unravel and oversee. Consumers may be encouraged to join fake associations to buy health insurance so they have an illusion of coverage—and the insurers collect membership dues and premiums while illegally avoiding state oversight).” [Families USA, October 2010]

GAO Report In 1992 Showed Similar AHPs Left At Least 398,000 Participants With More Than $123 Million In Unpaid Claims And More Than 600 Plans In Almost Every State Failed To Comply With State Laws.“Back in 1992, the Government Accountability Office issued a scathing reporton these multiple employer welfare arrangements (known as MEWAs; they’re pronounced “mee-wahs”) in which small businesses could pool funds to get the lower-cost insurance typically available only to large employers. These MEWAs, said the government, left at least 398,000 participants and their beneficiaries with more than $123 million in unpaid claims between January 1988 and June 1991. Furthermore, states reported massive and widespread problems with MEWAs. More than 600 plans in nearly every U.S. state failed to comply with insurance laws. Thirty-three states said enrollees were sometimes left without health coverage when MEWAs disbanded…’MEWAs have proven to be a source of regulatory confusion, enforcement problems and, in some instances, fraud,’ the GAO wrote at the time.” [Washington Post, 10/12/17]

Last week, the Department of Justice announced that it would aid and abet twenty states in a politically-motivated lawsuit against the Affordable Care Act. Specifically, the DOJ has decided to argue that key consumer protections, including protections for up to 130 million Americans with pre-existing conditions, should end now that Republicans have axed the law’s individual mandate through last year’s tax bill.

Yesterday, groups and experts from all sides, ranging from physicians to legal scholars to small businesses and health insurance companies, joined together to submit amicus briefs highlighting the absurdity and the cruelty of the Trump DOJ’s argument.

Patient groups, physicians, and hospitals emphasize how much the lawsuit could threaten care for people across the country:

• American Cancer Society, American Cancer Society Cancer Action Network, American DIabetes Association, American Heart Association, American Lung Association, and National Multiple Sclerosis Society: “Striking Down These Provisions Would Be Catastrophic And Have Dire Consequences For Many Patients With Serious Illnesses.” Invalidating the ACA in whole or in part “would be devastating for the millions of Americans who suffer from serious illness or have preexisting conditions and rely on those protections under current law to obtain life-saving health care. If either the plaintiffs’ or the administration’s position were adopted by the court, people with serious illness are likely to be denied coverage due to their preexisting conditions or charged such high premiums because of their health status that they will be unable to afford any coverage that may be offered. Without access to comprehensive coverage, patients will be forced to delay, skip, or forego care. Striking down these provisions would be catastrophic and have dire consequences for many patients with serious illnesses.” [American Cancer Society et. al, 6/14/18]

• American Medical Association, The American Academy of Family Physicians, The American College of Physicians, The American Academy of Pediatrics, and the American Academy of Child and Adolescent Psychiatry: “​Invalidating The Guaranteed-issue And Community Rating Provisions—or The ​entire A​CA—would Have A Devastating Impact On Doctors, Patients, And The American Health Care System As A Whole.” “Congress declined to do what the Plaintiffs ask this Court to do for a reason: the consequences of repealing the ACA would be staggering…Plaintiffs’ proposed remedies . . . would strip health care from tens of millions of Americans who depend on the ACA; produce skyrocketing insurance costs; and sow chaos in the nation’s health care system​…The ACA’s ‘nationwide protections for Americans with pre-existing health conditions’ has played a ‘key role’ in allowing 3.6 million people to obtain affordable health insurance. Severing those vital insurance reforms would leave millions without much-needed insurance.” [AMA et. al, 6/14/18]

• American Hospital Association, Federation of American Hospitals, The Catholic Health Association of the United States, and Association of American Medical Colleges: “A judicial repeal would have severe consequences for America’s hospitals, which would be forced to shoulder the greater uncompensated-care burden that the ACA’s repeal would create.” The relief sought by Texas and its allies “would have devastating consequences, kicking millions of Americans off of coverage and inflicting on them all the harms that come with being uninsured. These harms would fall on the low-income families least able to cope with them. ​And a judicial repeal would have severe consequences for America’s hospitals, which would be forced to shoulder the greater uncompensated-care burden that the ACA’s repeal would create.” [American Hospital Association et. al, 6/14/18]

• Public Health Scholars and the American Public Health Association: “The Foreseeable Public Health Consequences Of The Injunction Are Nothing Short of Catastrophic.” “Without the ACA, the health of millions of Americans would be harmed. Consider the grim analyses of proposed legislation partially repealing the ACA: In 2017, the nonpartisan Congressional Budget Office (“CBO”) assessed the impact of a bill partially repealing the ACA and found (among other things) that it would, in “the first new plan year following enactment of the bill” alone, increase the number of uninsured Americans by 18 million. That number would grow to 27 million after the “year following the elimination of the Medicaid expansion,” and then to 32 million by 2026. Still more is at stake here: Unlike the injunctive relief plaintiffs seek, the bill analyzed by CBO would have staggered its partial repeal of the ACA to avoid catastrophic results. Here, plaintiffs ask the Court to eliminate, as preliminary injunctive relief, a complex statute in its eighth year of implementation—a statute whose repeal through democratic means has been attempted innumerable times but has never succeeded.” [Public Health Scholars et. al, 6/14/18]

• AARP: Before ACA’s Protections, Discrimination Against Those With Pre-Existing Conditions, Age Rating, And Annual And Lifetime Caps Made Accessing Health Care Out Of Reach For Older Adults. “Uninsured pre-Medicare adults faced nearly insurmountable challenges to securing insurance because they were denied coverage based on preexisting conditions or offered costly policies that excluded coverage for needed care. Even without preexisting conditions, insurance premiums for older adults were as much as 11 times greater than their younger counterparts solely based on their age. Even a healthy person who was age 50 to 64 with no preexisting conditions faced markedly higher insurance premium rates than a younger person. Age rating put the cost of insurance out of reach for many pre-Medicare adults. Annual and lifetime caps—which were easily exceeded by treatment for a single illness such as cancer, heart disease, or diabetes—meant that many older adults either went without treatment until they became eligible for Medicare or incurred financially ruinous medical debt.” [AARP, 6/14/18]

Health insurance companies warn that the lawsuit could lead to mass coverage losses:

• America’s Health Insurance Plans: “Abruptly threatening or even cutting off billions of federal dollars that allow individuals to purchase insurance and that fund benefits offered through Medicaid or Medicare would have devastating effects.”“The healthcare system, while constantly evolving, cannot pivot to a new (or, worse yet, non-existent) set of rules without consequences. Abruptly threatening or even cutting off billions of federal dollars that allow individuals to purchase insurance and that fund benefits offered through Medicaid or Medicare would have devastating effects.​ Enjoining enforcement of federal laws like the federally-facilitated marketplaces and the products sold on them would be similarly disruptive.” [AHIP, 6/14/18]

• The Ability Of Millions Of Low-Income, Medically Vulnerable People To Access Necessary Treatments Would Be Cast Into Doubt. “The Medicaid program would likewise experience significant disruptions​. Stopping the funding for individuals made newly eligible for Medicaid under the ACA would harm the 34 states that have chosen to expand their Medicaid programs and potentially disrupt healthcare coverage for the 12 million people added as a result of that expansion​…The coverage of millions of low-income and medically-vulnerable patients—and their ability to receive necessary treatments and prescription drugs—would be cast into doubt. At the same time, state Medicaid programs would see drug costs increase considerably for all enrollees (including children, disabled, and elderly) due to the loss of the ACA’s enhanced prescription drug rebates​.” [AHIP, 6/14/18]

Small businesses and the Service Employees International Union (SEIU) demonstrate how DOJ’s lawsuit would jeopardize Americans’ health while harming the economy:

• Small Business Majority Foundation: “Before the enactment of ACA, this linkage pressured individuals to seek out and then stay put in jobs that provided affordable health insurance—a phenomenon known as ‘job lock’—because people clung to jobs with affordable health coverage even when they might have otherwise chosen to start businesses or pursue more attractive job opportunities with growing small businesses.” Small business owners, their employees, and self-employed individuals have benefited significantly from the many different reforms enacted as part of the Affordable Care Act, especially the creation of the individual marketplaces with tax credits, the optional expansion of Medicaid, and small group market reforms. Millions more working Americans, who are self employed or employees of the Nation’s small businesses, now have health insurance that they would not have had without the Act. The harm they will suffer if the Act is enjoined is just one of many reasons why the public interest is not served by Plaintiffs’ sweeping requested injunction.” [Small Business Majority Foundation, 6/14/18]

• Service Employees International Union (SEIU): “A Decision Striking Down The ACA Not Only Would Strip Health Coverage And Protections From Nearly 30 Million People And Remove Quality Care Incentives For Providers But Also Would Have Catastrophic Economic Consequences.” “Loss of the ACA would cause an enormous surge in the number of uninsured Americans, which would in turn increase the burden of uncompensated medical care costs borne by hospitals and other medical care providers by an estimated $1 trillion between 2019 and 2028. The massive reduction in federal funding would lead to the loss of up to 2.6 million jobs. And because the health care sector accounts for such a large percentage of the overall U.S. economy, eliminating the ACA would result in a $2.6 trillion reduction in total business activity between 2019 and 2023.” [SEIU, 6/14/18]

Law professors and the American Medical Association question the legality of the Justice Department’s argument:

• Law Professors From Both Sides Of The Aisle, Including Jonathan Adler, Ilya Somin, Nicholas Bagley, Abbe Gluck, and Kevin Walsh, Note That Despite Their Different Policy Perspectives, They Agree That DOJ’s Arguments About Severability Are Inconsistent With The Law. “[A] court’s substitution of its own judgment for that of Congress would be an unlawful usurpation of congressional power and violate basic black-letter principles of severability. Yet that is what the plaintiff States and the United States invite this Court to do.​..This time-shifting of congressional intent misapplies severability doctrine. By expressly amending the statute in 2017 and setting the penalty at zero while not making other changes, Congress eliminated any need to examine earlier legislative findings or to theorize about what Congress would have wanted. Congress told us what it wanted through its 2017 legislative actions.” [Jonathan Adler et. al, 6/14/18]

• American Medical Association, The American Academy of Family Physicians, The American College of Physicians, The American Academy of Pediatrics, and the American Academy of Child and Adolescent Psychiatry: DOJ Seeks To “Change The Federal Government’s Health Care Policy Through The Courts.” “The plaintiffs do not seek redress for any real, concrete injury because they have suffered none. They simply seek to change the federal government’s health care policy through the courts, rather than through the legislature.” [AMA et. al, 6/14/18]