Over the last few years, some members of Congress have emphasized the need for reforming our nation’s health care system. While many efforts were aimed at dismantling Obamacare, doing so has not proven easy. Republicans, particularly in the Senate, were unable to find a consensus on a path for reform.
In response, President Trump took matters into his own hands. On Oct. 12, the President signed an executive order directing federal agencies to find ways to increase competition and lower costs. Most importantly, the order calls for the Department of Labor to issue a broader interpretation of the Employee Retirement Income Security Act, the federal law that regulates private insurance plans, to allow for greater access to association health plans. Now, groups of small businesses will be able to purchase insurance together through an association in the same way large employers can.
This could be a huge step forward in reducing costs for small businesses across the country, including chemical distributors. By pooling employees together, companies would have greater bargaining power with insurance companies. Likewise, the order would reduce the administrative burden placed on small businesses managing an employee health plan. Under this plan, those burdens would be placed on the industry association.
While this is good news, unfortunately these reforms will not happen overnight. There is a long, strenuous process for enacting changes to current regulations. The executive order states that the Department of Labor will have 60 days to consider proposing new regulations. Once those regulations are proposed, there will be a public comment period where individuals and organizations will have an opportunity to submit comments on the proposal. The department is then mandated to consider each comment submitted. After a period of review, the department will then issue a final regulation which should include an effective date for when new association health plans could be formed. This process could take at least a year, if not more, to complete.
Another wrench that could delay implementation: lawsuits. When the regulations are released, several groups will likely file lawsuits against them. These groups will include insurance companies who will argue that it will lead to imbalance in the individual market which will drive up costs for sicker individuals. Another group opposed to the plan is state insurance regulators. They will argue that association health plans will not have to abide by state consumer protection laws as current small business plans must do.
So, while the news coming out of Washington regarding association health plans is good, it is only the first small step to any concrete changes. It’s going to be a long and bumpy road before chemical distributors will be able to see any changes to their healthcare options. But at least for now we are moving in the right direction.