No one ever said the ACA was perfect – any time you try to reform a system that’s as fractured, opaque and confused as our current insurance system – you’re going to stumble across some crazy stuff, like association health plans (AHPs). These odd creatures of our insurance system are often totally unregulated by state insurance departments. Luckily, for the most part the ACA treats health insurance sold through associations just like other health plans – they have to implement the September 23 reforms just like everyone else. But last month, for the first time, the Obama Administration raised the possibility that health insurance sold through associations might be exempted from one of the ACA’s most important consumer protections – rate review that examines premiums on insurance. And, if AHPs are exempted from rate review, it raises some scary questions, such as whether they’ll be subject to the 2014 reforms, like the essential benefit package and adjusted community rating. Regardless, you can be sure that if they get any breaks at all, we’ll see a rush of insurance companies trying to get into the AHP business.

What’s an AHP, and why would it be exempted from rate review? Millions of people buy insurance through associations – and they can be a way for a self-employed person (i.e., freelancers, real estate agents, independent contractors) to access insurance. AHPs are often sold to individuals or small groups, and some are formed by professional organizations. But some AHPs are created by insurance companies and exist solely to sell insurance. And in many states, AHPs exist in a gray area of regulation – even though individuals and small businesses are buying the coverage (and are often individually underwritten), they’re considered “large group” coverage, and subject to less regulation. And some aren’t subject to any regulation at all – according to a 2006 study by my colleagues at Georgetown, approximately 24 states don’t claim any jurisdiction over “out-of-state” AHPs, even if the policies are sold to their own citizens.

Of the states that conduct premium rate review in the individual and small group markets, the study also found that a significant number of states don’t require AHPs to submit their rates for review. So, unless HHS explicitly extends the rate review regulation to AHPs there will be a loophole in the law that insurance companies will rush to take advantage of. AHPs are highly concentrated in states that exempt them from rate regulation. This will only accelerate if insurers can use an AHP structure to escape the new federal requirements in the ACA. In addition, if AHPs are allowed to be considered “large group” coverage for purposes of the ACA, they’ll not only get a pass from rate review, but there’s a risk they could also escape critical 2014 reforms like the requirement to cover the essential benefits package, and the elimination of health status rating.

What can we do about it? HHS has asked for comments on whether AHPs should be subject to rate review. Those comments are due July 18th. It’s important that HHS hear about why ALL consumers deserve rate review protections, whether they’re in a traditional health plan or a plan sold through an association.

Note from Community Catalyst: Stay tuned for more resources to help state advocates comment on AHPs and rate review. Or contact Christine Barber ( if you are interested in commenting to HHS.

— Sabrina Corlette, Research Professor Health Policy Institute, Georgetown University