The Employee Benefits Security Administration(EBSA) today posted draft regulations that could let a trade groupoffer a nationwide association health (AHP) plan for its memberemployers.

Under the draft regulations, a general business group in amulti-state metropolitan area could offer an AHP for all of itsmember employers, regardless of what industry the employers werein, as long as the employers were in the group's metropolitanarea.

Today, a business group that wants to sponsor an AHP must havesome other "bona fide purpose."

Under the draft regulations, an AHP would not have to have anypurpose other than to provide health benefits. Organizers could setup a new AHP simply to obtain health coverage.

EBSA, an arm of the U.S. Department of Labor (DOL), developedthe draft regulations in response to an executive order PresidentDonald Trump signed in October.

The order calls for federal agencies to try to ease employeraccess to AHPs.

The order also calls for federal agencies to ease individuals'constraints on access to short-term health insurance, and to easeany constraints on employers' use of health reimbursementarrangements.

The new draft regulations packet, which takes up 83 PDF filepages, is set to appear in the Federal Register on Friday. TheFederal Register is a publication the federal government uses todistribute official regulatory documents, ask for comments on draftregulations, and put completed regulations into effect.

EBSA lists Elizabeth Schumacher, an official in the EBSA Officeof Health Plan Standards and Compliance Assistance, and Janet Song,an official in the Office of Regulations and Interpretations, asthe regulation project contact people.

Jeanne Klinefelter Wilson, the DOL deputy assistant secretarywho's been managing EBSA, signed the draft packet.

Comments on the new draft regulations will be due 60 days afterthe official publication date.

A copy of the packet is available here.

Here's a look at seven highlights from the packet.

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1. Association health plans already exist.

Federal regulators already let employers form single-stateAHPs.

The Small Business Health Options Program (SHOP), part of theAffordable Care Act public health insurance exchange system, givesSHOP members the ability to buy health coverage through a programthat could function as a kind of government-run, multi-industry AHPfor small employers.

As of January 2017, however, SHOP plans were serving just 27,205small employers and covering just 233,000 employees and dependents,EBSA officials write in the introduction to the proposedregulations.

Multiple employer welfare arrangements, or MEWAs, cover about1.8 million people, officials estimate.

EBSA officials note, however, that one problem they ran intowhen they were developing and analyzing the new draft regulationsis a lack of data on the existing multi-employer health planpurchasing programs.

Officials say the draft regulations would have no direct effecton existing types of multi-employer coverage purchasingarrangements, and that the new AHPs could use MEWAs, voluntaryemployees' beneficiary association charters and similar vehicles toprovide coverage.

2. EBSA officials talk about why they are easing accessto AHPs, and why they have mixed feelings about theproject.

EBSA drafted the new proposal because some employers believeAHPs would help them cut benefits costs, officials write.

AHP supporters believe stronger AHPs could "purchase coveragethat would be less expensive, because it would not be subject tosome of the regulatory requirements applicable to the small-groupmarket but not the large-group market," officials write."Proponents also contend that AHPs can help reduce the cost ofhealth coverage because of increased bargaining power, economies ofscale, administrative efficiencies, and transfer of planmaintenance responsibilities from participating employers to theAHP sponsor."

For would-be AHP organizers, one problem has been that theCenters for Medicare and Medicaid Services (CMS), an arm of theU.S. Department of Health and Human Services, has rarely treatedthe association as the true AHP coverage sponsor, EBSA officialswrite.

Instead, officials write, CMS officials have "looked through"the association to see what kind of employer was sponsoring aparticular individual's coverage. If an AHP member employer is asmall business, for example, CMS applies small-group rules to thecoverage, not large-group or association rules, officials say.

Officials note several times, however, that they want to findways to keep state insurance regulators and other entities involvedin keeping AHPs from suffering the same kinds of problems that havetraditionally plagued MEWAs.

"Some MEWAs have historically been unable to pay claims due tofraud, insufficient funding, or inadequate reserves," officialssay.

Officials also emphasize their concern about the possibilitythat AHPs could try to discriminate against workers, dependents oremployers based on individual health plan enrollees' healthstatus.

3. EBSA says it can ease AHP formation without changesin existing laws or regulations by changing "sub-regulatoryguidance."

EBSA officials say that many of the rules that now govern AHPswere established in advisory opinions or other batches of"sub-regulatory" guidance.

EBSA believes the DOL can change the interpretations given inthe sub-regulatory guidance by establishing new regulations,officials say.

Officials note that EBSA has developed the new draft togetherwith officials from CMS and from the Internal Revenue Service.

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4. EBSA would ease association health plan formationmainly by changing the definition of "employer" for AHP purposes,and it would try to keep AHPs from using that change todiscriminate against high-risk people, or against employers withhigh-risk plan enrollees.

Under the current federal AHP regulations, the employers in anAHP must meet a "commonality" standard, meaning that they havesomething in common other than wanting to provide healthcoverage.

Individual employers can offer different benefits packages andpremium structures for different classes of workers, but employerscannot use the worker classes to discriminate against people basedon their health status, officials say.

An AHP that applies risk rating to member employers is actinglike a commercial insurer, and that conflicts with the rulesCongress has set, officials say.

Under the proposed regulations, an AHP could not treat memberemployers as "distinct groups of similarly-situated individuals"and set different rates for different distinct groups.

EBSA is also requiring that the member employers control an AHP,to reduce the likelihood that an AHP will act like a commercialinsurer and increase the odds that the AHP will act in the interestof the participating employers.

5. EBSA would give some general-purpose AHPs a limitedability to sell coverage across statelines.

Under the draft regulations, a chamber of commerce or similargroup in a multi-state metropolitan area, such as the Kansas Cityarea or the New York City area, could offer AHP coverage to memberemployers throughout the metropolitan area.

6. EBSA might try to exempt self-insured MEWAs fromstate benefits mandates.

EBSA officials say they are working on more regulations, andthat the future proposals could involve DOL's authority to exemptself-insured MEWAs from state regulation.

"The proposed rules would not alter existing ... statutoryprovisions governing MEWAs," officials say. "The proposed rulesalso would not modify the states’ authority to regulate healthinsurance issuers or the insurance policies they sell to AHPs."

A state could still regulate a self-insured MEWA's solvency,officials say.

7. Comments on the draft regulations will be due 60 daysafter the official Federal Register publication date.

EBSA officials are asking for comments on all aspects of theproposed regulations, and any alternative approaches that would fitwith the existing laws and regulations.

The draft also asks for comments on how the proposal mightinteract with other state and federal laws and regulations, such asInternal Revenue Section 501(c)(9).

Section 501(c)(9) governs voluntary employees’ beneficiary associations(VEBAs), and some AHPs might want to use VEBAs, officialssay.

"Comments are also solicited on the impact of these proposals onthe risk pools of the individual and small group health insurancemarkets, and for data, studies or other information that would helpestimate the benefits, costs, and transfers of the rule," officialssay.