Vermont is preparing to regulate a new health insurance option offered by Republican President Trump's administration, citing concerns the plans may not be financially solvent and may leave consumers vulnerable to fraud.
The U.S. Department of Labor last month issued final rules for "association health plans," which can be offered beginning in September. The administration said the plans will help small businesses and self-employed people save on premiums by purchasing plans that can group employers by industry or geographic area, including multi-state regions. Under these plans, providers can exclude specific benefits required under the Affordable Care Act, such as mental health services, maternity care or prescription drugs.
Labor Secretary Alex Acosta said the plans will help consumers, but Michael Pieciak, commissioner of the Vermont Department of Financial Regulation, said the state still has a responsibility to ensure the plans will protect its residents.
"The department aims to craft regulations that ensure Vermonters are protected and well-served by these health plans," Pieciak said Monday. "In the past, similar plans that operated in other states were poorly run, and many were fraudulent."
No association health plans currently operate in Vermont, but the change in federal regulation may make them available in the state.
Karen Pollitz, a senior fellow at the Kaiser Family Foundation who worked at the Department of Health and Human Services during the Obama and Clinton administrations, said states may have reason to remain skeptical of association health plans.
"It is true that association plans in general have a very unfortunate history of scams and insolvency," Pollitz said. "People have been left with hundreds of millions of dollars in unpaid claims over the years."
Some association health plans in the past have not been adequately funded, and others have been run by "crooks" that make the plan look and sound real while offering little to the consumer when they need coverage, Pollitz said.
The Labor Department did not respond to requests for comment.
The department announced last month that states will continue to share enforcement authority with the federal government. In May, Republican Governor Phil Scott signed a law directing the commissioner of financial regulation to "adopt rules regulating association health plans to protect Vermont consumers and promote the stability of Vermont's health insurance markets."
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