Montpelier — A legislative committee has rejected regulations proposed by Gov. Phil Scott’s administration regarding “association” health coverage, signaling that lawmakers intend to explore even tougher rules for the controversial insurance plans.
Thursday’s vote by the Legislative Committee on Administrative Rules is the latest development in Vermont’s attempt to counter the federal government’s expansion of association health plans, which allow smaller employers to band together to offer health coverage.
After extensive debate, the rules committee decided that the Department of Financial Regulation’s proposed regulations governing association plans don’t fulfill a legislative mandate to “protect Vermont consumers and promote the stability of Vermont’s health insurance markets.”
That vote largely is symbolic, since the department says it will implement the rule anyway. But the move shows that some lawmakers are of the same mind as Vermont Chief Health Care Advocate Mike Fisher, who argued that the state should do more to curb association plans.
Earlier this year, the U.S. Labor Department announced new rules designed to loosen restrictions on association health plans. The changes include allowing businesses to form an association only on the basis of geography, as well as allowing sole proprietors to get involved in associations.
Proponents — including the administration of President Donald Trump — say the new federal rules make it easier for small businesses to find and afford health insurance in an increasingly expensive market.
But detractors worry that association plans can be loosely regulated and offer less comprehensive coverage. There’s also concern that association plans will pull a significant number of people out of insurance exchanges like Vermont Health Connect, driving up premiums for those who remain.
Working under a tight deadline after the federal changes were announced, the Vermont Department of Financial Regulation enacted emergency rules that placed a variety of new licensing, registration and operational changes on association health plans. Among the most significant was a requirement that association plans cover the 10 essential health benefits as defined in federal law.
After some additional tweaks, the department sought the rules committee’s endorsement of final regulations governing association health plans. Emily Brown, the department’s assistant director of rates and forms, told lawmakers on Thursday that “we have a regulatory framework in place that we believe protects the marketplace and does provide protection for Vermont consumers.”
But not everyone agrees. Fisher says the department’s regulations are “contradictory to the clear legislative intent” in Act 131, the law passed earlier this year ordering the department to adopt new rules for association health plans.
Fisher has been arguing for further regulation via what’s called the “look-through” doctrine. Essentially, that would take away a major financial and regulatory advantage of association health plans by not allowing small businesses and individuals to be treated as larger groups in the insurance marketplace.