Vermont to regulate Trump administration’s fraud-prone association health plan rule

Association health plans are not required to cover basic health benefits, leaving many open to high costs and little protection.

Credit: Getty Images
Credit: Getty Images

Vermont officials are seeking to regulate the Trump administration’s association health plan proposal, introduced in January and finalized by the Department of Labor last month, amid concerns that the plans would make health insurance inaccessible and prone to fraud.

Introduced under the guise of providing consumers with more choice and cheaper options, association health plans (AHP) allow businesses to form associations based on geography or industry and can provide insurance plans that do not abide by rules set forth in the Affordable Care Act (ACA). Under the ACA, insurers are required to provide a list of essential health benefits in order to officially pass as insurance. As ThinkProgress’ Amanda Michelle Gomez previously reported, AHPs leave “an opening for junk insurance” by failing to cover the basics like maternity care and prescription drugs, and providing low premiums and extremely high deductibles.

AHPs also chip away at the ACA because it is likely that younger, healthier individuals will be drawn to the health plans, believing that they do not need comprehensive health coverage. As a result, there will be older, sicker people on ACA plans, and they will be left with expensive premiums. According to Avalere Health, more than 4 million people will likely leave the ACA in favor of AHPs. The resulting premium increases would cause an additional estimated 130,000-140,000 people to be uninsured over the next five years. 

Although there are currently no AHPs in Vermont, the state is one of the first to push back against the Trump administration’s new rule. Last month, New York and Massachusetts announced that they would sue the Trump administration over the rule. In March, the three states joined 14 others to pen a letter to the Department of Labor in opposition to the president’s proposed AHP rule.


On Monday, commissioner of the the Vermont Department of Financial Regulation Michael Pieciak said in a statement that his agency “aims to craft regulations that ensure Vermonters are protected and well-served by these health plans … In the past, similar plans that operated in other states were poorly run, and many were fraudulent.”

“There’s been experience in other states where self-funded [association health] plans weren’t properly overseen, and then all of the sudden there was a solvency issue,” Pieciak told the VTDigger. “So halfway through the year, the association goes kaput, and people are left with claims that are not being paid.”

In February, Pieciak and Kevin Mullin, chair of Green Mountain Care, wrote a letter to state legislators asking them to “explicitly” give the Department of Financial Regulation (DFR) “rulemaking authority over AHPs.” Lawmakers drafted a bill, later signed by Gov. Phil Scott (R) in May, that does just that.

Vermont’s DFR plans to issue the new regulations by August 1. In the meantime, the agency is seeking comments from Vermont residents and industry experts and stakeholders.