The U.S. Department of Labor on Thursday unveiled new rules that would allow small businesses and entrepreneurs to join together to form their own health insurance pools.
The rules, which will be open to a 60 day public comment period, are a direct response to President Donald Trump's executive order on health care, which would expand health associations and allow people participating in the groups to buy insurance that does not meet all of the coverage requirements under the Affordable Care Act, also known as Obamacare.
"Under the proposal, small businesses and sole proprietors would have more freedom to band together to provide affordable, quality health insurance for employees," a statement from the Department of Labor reads.
Association Health Plans already exist but are subject to federal limitations. They are subject to state requirements for insurance coverage, which means some would not have to meet the same essential health care coverage requirements like maternity care and addiction services mandated under Obamacare.
Critics of the original executive order argued that expanding AHPs would destabilize the Obamacare insurance markets because it would encourage healthier Americans to join insurance groups in order to get cheaper plans with less coverage requirements. That would leave behind sicker Americans in the Obamacare markets, driving up the price of insurance.
However, the new Department of Labor rule prohibits discrimination or higher premiums based on an individual's health needs.
Larry Levitt, executive vice president of the non-profit Kaiser Family Foundation called that "a big deal (that) would mitigate the extent to which these plans destabilize the current insurance market," according to USA Today.
Americans would be able to buy these plans across state lines.
Trump's executive order was largely inspired by a proposal from Kentucky Republican Sen. Rand Paul.
"I applaud the administration for its action today, and I look forward to the finalization of the proposed rule. Conservative health care reform is alive and well, and I will keep working with President Trump to build on this progress,” Paul said in a statement Thursday.