How CBO and JCT Analyzed 

Coverage Effects of New Rules for 

Association Health Plans and 

Short-Term Plans

JANUARY 2019
Notes

This analysis was conducted in August 2018 using projections of federal revenues and 

spending for fiscal years 2019 through 2028. Estimates of health insurance coverage reflect 

average monthly enrollment during a calendar year and include spouses and dependents 

covered under family policies. Those estimates are for the noninstitutionalized civilian 

population under age 65. 

Numbers in the text, tables, and figure may not sum to totals because of rounding.

www.cbo.gov/publication/54915
Contents

How CBO and JCT Analyzed Coverage Effects of New Rules for Association Health 

Plans and Short-Term Plans 1

Summary 1

What Are the New Rules? 1

How Does CBO’s Baseline Reflect Administrative Actions? 3

How Did CBO and JCT Approach the Analysis? 3

How Are the New Rules Expected to Change Coverage? 6

What Are the Greatest Sources of Uncertainty in the Estimates? 9

How Do CBO and JCT’s Estimates Compare With Other Analyses? 10

What Key Technical Inputs Did CBO and JCT Use? 11

Selected Bibliography 14

About This Document 16

Tables

1. Projected Average Annual Enrollment With and Without the New 

Rules for AHPs and Short-Term Plans, 2019 to 2028 7

2. Estimated Average Annual Enrollment of People Who Are Projected 

to Change Their Insurance Coverage Because of the New Rules for 

AHPs and Short-Term Plans, 2019 to 2028 9

3. Estimates of Annual Enrollment in AHPs and Short-Term Plans 

Resulting From the New Rules for AHPs and Short-Term Plans 10

4. Estimates of Premium Increases in the Fully Regulated Nongroup 

Market Resulting From the New Rules for AHPs and Short-Term Plans 11

5. CBO and JCT’s Use of Technical Inputs to Estimate the Effects of the 

Rules on AHPs and Short-Term Plans 12

Figures

1. Estimated Average Annual Enrollment of People Who Are Projected 

to Change Their Insurance Coverage Because of the New Rules for 

AHPs and Short-Term Plans, 2019 to 2028 8

How CBO and JCT Analyzed 

Coverage Effects of New Rules for 

Association Health Plans and Short-Term Plans

Summary

During the summer of 2018, the Administration issued 

final rules governing coverage offered through association 

health plans (AHPs) and short-term, limited-duration 

insurance. (AHPs are legal arrangements that allow 

associations or unrelated employers to jointly offer fringe 

benefits to members or employees.) The rules were 

designed to increase enrollment in such plans, which 

may be sold in the small-group and nongroup insurance 

markets. AHPs and short-term plans are exempt from 

many of the regulations that govern other insurance 

offerings in those markets. 

This report describes how the Congressional Budget 

Office and the staff of the Joint Committee on Taxation 

(JCT) analyzed the new rules and determined how those 

rules would affect the agencies’ projections of the number of people who obtain health insurance and the costs 

of federal subsidies for that coverage. It also provides 

details about the projected effects. 

CBO and JCT’s current findings are similar to those 

from an analysis of the two rules as they were proposed. 

Those findings were published in a report on federal 

subsidies for insurance coverage that CBO released with 

its spring 2018 baseline.1

The agencies’ two main findings from the current 

analysis are as follows:

• Each year over the next decade, roughly 5 million 

more people are projected to be enrolled in AHPs or 

1. See Congressional Budget Office, Federal Subsidies for Health 

Insurance Coverage for People Under Age 65: 2018 to 2028

(May 2018), pp. 10–11, www.cbo.gov/publication/53826. 

short-term plans as a result of the two rules. Almost 

80 percent are people who would otherwise have 

purchased coverage in the small-group or nongroup 

markets. The remaining 20 percent (roughly 

1 million people) are projected to be newly insured as 

a result of the rules. 

• Once the two rules take full effect, premiums for 

coverage in the fully regulated small-group and 

nongroup markets are projected to be roughly 

3 percent higher than they would have been without 

the rules. In 2028, for example, such an increase 

would raise average annual premiums by roughly 

$350 to $400 for single coverage and by $900 

to $950 for family coverage. Premiums for fully 

regulated coverage are projected to rise because 

people who continue to purchase coverage in the 

fully regulated markets are expected to have higher 

average health care costs than those who purchase 

AHPs or short-term plans. Because federal subsidies 

defray some of the higher costs, CBO and JCT do 

not expect that premium increase to spur a noticeable 

decline in insurance coverage.

What Are the New Rules?

In June 2018, the Administration published a final rule 

that modified the definition of “employer” under title I 

of the Employee Retirement Income Security Act, or 

ERISA. In August, it published a final rule to amend the 

definition of “short-term, limited-duration insurance.”2

2. See Definition of “Employer” Under Section 3(5) of ERISA—

Association Health Plans, 83 Fed. Reg. 28912 (June 21, 2018), 

https://go.usa.gov/xPf4M; and Short-Term, Limited-Duration 

Insurance, 83 Fed. Reg. 38212 (August 3, 2018), https://go.usa.

gov/xEcKs. 
2 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS January 2019

Association Health Plans

The first rule makes it easier for business associations and 

other entities to offer health insurance through AHPs. 

Although such coverage existed before that rule was 

issued, the rule established a new, less restrictive pathway 

for groups to form associations that offer plans, and it 

broadened the definition of “small employer” to include 

self-employed people.3

The rule also specifies that AHPs formed under the new 

pathway would be regulated as though they offered largegroup coverage—rather than nongroup or small-group 

coverage—regardless of the size of member businesses. 

(Large-group coverage is generally for businesses with 

more than 50 employees; small-group coverage is for 

businesses with 50 employees or fewer. Nongroup coverage is purchased directly by an individual from an insurer 

or through a health insurance marketplace rather than 

through an employer.) Although large-group coverage is 

subject to federal and state regulations, it is exempt from 

some requirements that are specific to the nongroup and 

small-group markets, notably the following:

• Insurance plans must cover what are termed essential 

health benefits—that is, 10 categories of health care 

services that federal law defines as essential; and

• Within a given geographic region, premiums must 

be community rated—they may vary only within a 

predefined range and only on the basis of age and 

tobacco use.

All other factors being equal, coverage of essential health 

benefits increases the financial protection associated with 

health insurance by increasing the scope of coverage but 

also the cost of premiums. Community rating makes it 

easier for people who are older or less healthy to afford 

3. The rule retained the original pathway for groups to form 

associations and offer AHPs but created a new pathway that has 

less stringent requirements for the “commonality of interest” test 

for associations. In particular, groups of employers are considered 

to meet that requirement if they share an industry (real estate, 

law, or hospitality, for example) or are based in the same 

geographic area. Under the original pathway, employer groups 

must have both attributes in common. AHPs formed under the 

new pathway will operate under a different set of regulations. For 

example, unlike AHPs formed under the original pathway, they 

will not be able to vary premiums on the basis of health status for 

each member of the association. For more information, see Fritz 

Busch and Jason Karcher, Association Health Plans After the Final 

Rule (Milliman, August 2018), http://tinyurl.com/y7nmfoyv. 

health insurance, but it tends to lead to higher premiums 

for people who are younger and healthier. 

Short-Term, Limited-Duration Insurance

The new rule for short-term plans extends their maximum duration from three months to 364 days and 

allows people to renew their policies for up to three 

years. Federal law exempts short-term plans from compliance with most regulations that govern nongroup coverage, including those that require coverage of essential 

health benefits and community rating but also guaranteed issue—the requirement that insurers offer policies 

to all applicants regardless of health status. Guaranteed 

issue makes it easier for people with preexisting conditions to gain access to health insurance, but it leads to 

higher premiums for other people.

Similarities Between AHPs and Short-Term Plans 

Offered Under the New Rules 

Because coverage sold under either of the two new rules 

need not comply with all of the requirements governing 

the nongroup and small-group markets, CBO and JCT 

expect that, on average, premiums for coverage under 

both types of plans will cost less than premiums for coverage in the fully regulated nongroup and small-group 

markets. That is particularly the case for the new types of 

coverage that will be available for younger and healthier 

people. 

Differences Between AHPs and Short-Term Plans 

Offered Under the New Rules

Although the two new types of coverage share some 

features, there are important distinctions concerning the 

types of plans that insurers may offer and the characteristics of people who might purchase those plans.

Availability and Pricing. For AHPs, premiums may 

reflect the expected health care spending of each association, but insurers cannot refuse coverage to association 

members. For short-term plans, insurers may charge 

premiums that reflect the expected health care spending 

for individual applicants and may refuse to cover people 

with high expected health care spending or preexisting 

conditions. 

Scope of Benefits. Although neither type of plan must 

cover all essential health benefits, AHPs tend to cover 

most of them. Short-term plans, however, are more likely 

to exclude many of those benefits and often exclude 

coverage for preexisting conditions. On the basis of 
January 2019 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS 3

interviews with insurers and other stakeholders, CBO 

and JCT expect that most of the new short-term plans 

will provide coverage that is more similar to AHP coverage than it is to coverage in short-term plans that predate 

the new rule but that, overall, AHPs will continue to 

provide broader coverage than short-term plans.

Eligibility. To be eligible to purchase AHP coverage, one 

must either work for a small employer that offers AHP 

coverage or be self-employed and a member of an association that sponsors an AHP. No similar requirements 

apply to purchasers of short-term plans. 

How Does CBO’s Baseline Reflect 

Administrative Actions?

CBO’s baseline budget and economic projections are 

constructed to reflect an assumption that current laws 

governing taxes and spending would generally remain 

in place during the current fiscal year and for the ensuing 10 years. The baseline projections are not intended 

to predict budgetary outcomes; rather, they reflect the 

agency’s best assessment about how the economy and 

the federal budget would evolve under existing laws. The 

baseline serves as a neutral benchmark against which 

Members of Congress can measure the budgetary effects 

of proposed legislation. 

Each year, CBO provides the Congress with updated 

baseline projections of federal revenues, spending, 

and the resulting deficits. It adjusts those projections 

throughout the year to account for enacted legislation 

and for other changes in law, including new regulations 

that are issued between formal baseline updates. 

Those projections include the costs of federal subsidies 

for health insurance, which reflect CBO’s estimates of 

the number of people with various types of coverage. The 

agency uses that coverage baseline to estimate the effects 

of proposed legislation on people’s sources of health 

insurance and on the number of people who would be 

without insurance.

The new rules for AHPs and short-term plans had been 

proposed but were not yet final in May 2018, when 

CBO last reported on federal subsidies for insurance coverage.4

 In keeping with CBO’s practices for estimating 

4. See Congressional Budget Office, Federal Subsidies for Health 

Insurance Coverage for People Under Age 65: 2018 to 2028 

(May 2018), pp. 10–11, www.cbo.gov/publication/53826.

the effects of proposed rules, those projections incorporated an assumption reflecting a 50 percent chance that 

the final rules would be the same as those proposed and 

a 50 percent chance that no rules like those proposed 

would be issued. A final rule, once issued, becomes 

CBO’s basis for estimating the effects of legislation. 

After the two rules were made final, CBO incorporated 

100 percent of the estimated effects of each into its baseline projections. 

The final rules were similar to the proposed rules. The 

most significant difference that affected CBO and JCT’s 

estimate was that both rules were implemented earlier 

than the agencies had assumed for their spring estimates. 

The earlier implementation dates would—in isolation—

have increased CBO and JCT’s estimates of enrollment 

in AHPs and short-term plans. However, several states 

enacted laws that prohibited the sale of short-term 

plans or required short-term plans to comply with all 

regulations that govern the nongroup health insurance 

market. Those laws are expected to reduce enrollment 

in short-term plans. As a result, CBO and JCT estimate 

that enrollment in AHPs and short-term plans under 

the final rules will be similar to the estimated enrollment 

described in CBO’s May 2018 report on federal subsidies 

for health insurance coverage.

How Did CBO and JCT 

Approach the Analysis?

To estimate the effects of the new rules for AHPs and 

short-term plans, CBO and JCT analyzed the incremental increase in coverage in both types of plans that will 

result from the rules (rather than assessing total enrollment in those plans, which were available before the final 

regulations were issued). The agencies followed several 

steps in completing their analysis, beginning with a comparison of estimated premiums for the new plans with 

those for the lowest-cost insurance otherwise available to 

individuals and small employers. 

Then, CBO and JCT adjusted that comparison to reflect 

any differences in the portion of medical expenses paid 

by the insurer (often called a plan’s actuarial value) and 

the scope of services covered.5 Although a premium for 

a new plan might be as much as 90 percent below the 

5. CBO and JCT estimated actuarial values on the basis of data 

from existing AHPs and short-term plans and after accounting 

for information gathered in interviews with insurers and other 

stakeholders about how the AHPs and short-term plans offered as 

a result of the rules would compare with existing products.
4 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS January 2019

premium of the lowest-priced plan currently available 

to someone with low expected health care spending, a 

new plan need not offer comparable benefits. (For many 

people, the premium amount for a new plan could be 

higher than their existing premium. Moreover, insurers 

can deny coverage in the new plans to an applicant or 

association with particularly high expected health care 

costs.)

The estimated average differences in premiums also 

reflect the expected health care spending for purchasers 

of AHPs and short-term plans. CBO and JCT used 

CBO’s health insurance simulation model to estimate 

potential purchasers’ expected health care costs under 

the new types of AHPs and short-term plans and to 

project those costs relative to costs for other people with 

small-group and nongroup coverage.6 On the basis of 

that analysis and other research, CBO and JCT projected that roughly 40 percent of people either would 

prefer fully regulated coverage to that offered by AHPs 

or short-term plans or would have health conditions that 

might prompt insurers to deny them coverage under a 

new plan. The remaining 60 percent of people would be 

candidates for coverage offered under the new rules. 

Potential purchasers are people who have no preexisting 

condition that would cause an insurer to deny them coverage entirely, those without a preexisting condition that 

requires continuing treatment that might not be covered 

under the new types of plans, and those who do not 

expect to use essential health benefits that are covered 

under fully regulated health plans but not under the new 

types of AHPs and short-term plans.

After identifying potential purchasers, CBO and JCT 

estimated a measure known as elasticity: the percentage change in the number of people who would choose 

different health coverage in response to a 1 percent 

change in a premium. In this case, elasticity is used to 

6. For more information about CBO’s current health insurance 

simulation model, see Congressional Budget Office, “The 

Health Insurance Simulation Model Used in Preparing CBO’s 

2018 Baseline” (presentation, February 2018), www.cbo.gov/

publication/53592. CBO will use an updated version of that 

model to develop the agency’s spring 2019 projections and 

subsequent cost estimates. For more information, see Jessica 

Banthin and Alex Minicozzi, “Updating CBO’s Health Insurance 

Simulation Model (HISIM)” (presentation at the Bipartisan 

Policy Center, Washington D.C., June 19, 2018), www.cbo.gov/

publication/54063.

arrive at an estimate of how readily someone would 

respond to the availability of lower-priced insurance. In 

general, CBO and JCT expect that lower premiums are 

more likely to attract people and employers who already 

purchase coverage than they are to convince a person 

or employer to purchase coverage for the first time. 

That is, the estimated elasticity is higher among people 

and employers currently in the insurance market. That 

expectation reflects both a thorough review of the literature and interviews with insurers and other stakeholders 

about what types of people and employers would be 

most likely to take up the new types of coverage offered 

under the two rules. (Specific elasticities, the research 

involved, and the basis for other key inputs to the estimate are discussed below in “What Key Technical Inputs 

Did CBO and JCT Use?”) 

CBO and JCT estimated the effects of the two rules 

jointly because each provides an alternative way for 

people to purchase coverage that does not comply with 

the regulations governing other insurance sold in the 

nongroup and small-group markets. For many selfemployed people, AHPs and short-term plans can be 

seen as substitutes for one another: If one type of plan 

is not available, people can instead purchase the other.7

CBO and JCT expect that if there had been no rule 

increasing the availability of short-term plans, more people would enroll in an AHP offered by their employer. 

In developing the estimates, CBO interviewed national 

and regional insurers, policy and legal experts, people 

who work for industry associations, and state insurance 

regulators.

Association Health Plans

CBO and JCT began by estimating premiums for the 

new AHPs and comparing those estimates with estimates 

of premiums for coverage currently sold in the smallgroup market.8

 On the basis of their analysis of existing 

7. Because people who do not work for small employers and are 

not self-employed can purchase short-term plans but not AHPs, 

their choice of coverage is affected only by the rule on short-term 

plans.

8. Although some self-employed people may purchase coverage 

through AHPs as a result of the rule, others may purchase shortterm plans. CBO and JCT expect that such people will compare 

the AHP and short-term plan premiums with premiums for fully 

regulated nongroup coverage. CBO and JCT therefore modeled 

the decisions of self-employed people as a choice to move from 

fully regulated nongroup coverage into either AHP or short-term 

plan coverage. 
January 2019 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS 5

premiums and as a result of interviews with insurers 

and other stakeholders, CBO and JCT estimate that 

premiums for AHPs sold under the new rules will be, 

on average, roughly 30 percent lower than premiums for 

fully regulated small-group coverage. 

That difference reflects two considerations: First, AHPs 

need not cover all essential health benefits, and second, 

AHPs are permitted to set premiums on the basis of 

each association’s expected or actual health care spending rather than at the community level. CBO and JCT 

estimate that the majority of the difference in premiums 

will stem from lower expected health care spending for 

AHP enrollees and not from differences in the scope of 

coverage. Indeed, CBO and JCT expect that the coverage provided by the newly offered AHPs will be similar 

to that under AHPs sold before the new rule, many of 

which need not cover all of the essential health benefits 

but still offer coverage that is similar to comprehensive 

employment-based coverage. According to insurers and 

other stakeholders, although AHPs may exclude some 

benefits that are required in the nongroup and smallgroup markets, they sometimes offer wider provider 

networks or lower deductibles than are available through 

other types of nongroup and small-group coverage. CBO 

and JCT expect that, on balance, the scope of benefits 

offered by AHPs will be somewhat narrower than the 

scope of benefits offered by other plans in the smallgroup market. 

The primary factor driving lower premiums for AHPs 

is the ability to price premiums on the basis of each 

association’s expected health care spending and thereby 

attract employers with relatively low-risk employees and 

avoid those with higher-risk employees. In the existing 

nongroup and small-group markets, insurers must use 

community rating to set premiums that reflect average 

costs across all enrollees within the markets. By offering 

coverage outside of those markets, AHPs can selectively 

cover people with lower expected health care costs and 

thus offer lower premiums. 

Because expected health care costs for people who purchase the newly created AHPs are likely be lower than 

those of the average small-group enrollee, CBO and JCT 

anticipate that the departure of such people from the 

regulated small-group market will result in an increase 

of roughly 3 percent for premiums among the plans 

offered by the remaining employers. However, because 

premiums for AHPs will be lower than premiums small 

employers are currently paying, premiums for the smallgroup market as a whole are projected to decline as a 

result of the rule.

Short-Term Plans

To estimate enrollment in newly offered short-term 

plans, CBO and JCT compared expected premiums 

with the lowest premiums available in the fully regulated 

nongroup market. That analytical choice reflects an 

assumption that people who are expected to purchase a 

short-term plan would compare the premium for that 

plan with the lowest-cost alternative otherwise available 

(including any premium tax credits).9 For most people who have nongroup coverage or are uninsured, the 

lowest-cost premium for available coverage generally 

corresponds to that for a bronze health plan (for which 

the insurer pays, on average, 60 percent of covered 

expenses).10

The difference in premiums between short-term plans 

and plans sold in the fully regulated nongroup market 

occurs because short-term plans are not required to cover 

all essential health benefits, insurers can price premiums on the basis of an individual’s expected health care 

spending, and short-term plans are permitted to exclude 

coverage of preexisting conditions or to refuse to provide or renew a plan for someone who uses costly health 

care services. That ability to exclude people with higher 

expected health care costs is a significant contributor 

to the lower premiums charged by short-term plans. 

Because people who purchase the newly created shortterm plans will have lower average health care costs than 

other nongroup enrollees, CBO and JCT estimate that 

their departure from the regulated nongroup market will 

raise premiums for the rest of that market by roughly 

3 percent.

The difference between premiums for short-term plans 

and for the lowest-cost option available through the 

marketplaces depends on the applicant’s characteristics, 

including age, health status, and income. Net premiums 

9. Under current law, tax credits are available to defray the cost 

of premiums for people whose income is generally between 

100 percent and 400 percent of the federal poverty guidelines 

(the federal poverty level) who have no other affordable source of 

health insurance.

10. In most marketplaces, people can choose a plan on the basis of 

its actuarial value. On average, bronze, silver, and gold plans pay 

about 60 percent, 70 percent, and 80 percent, respectively, of 

covered expenses. 
6 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS January 2019

(premiums paid after accounting for federal subsidies for 

health insurance) for the lowest-cost plan available in the 

marketplaces vary significantly depending on the size of 

the premium tax credit purchasers are eligible to receive. 

For example, some people can obtain bronze plans while 

paying a negligible net premium even though their total 

or gross premium might be significantly higher. CBO 

and JCT estimate that premiums for plans newly offered 

as a result of the short-term rule also will vary significantly because insurers will set premiums on the basis 

of a person’s health status and in some cases will deny 

coverage to an applicant. As a result, premiums for shortterm plans will be less than premiums for the lowest-cost 

marketplace plan for some people and higher for others.

On the basis of interviews with insurers and other 

stakeholders, CBO and JCT expect that a range of new 

short-term insurance products will be sold as a result of 

the new rule. For this estimate, CBO and JCT modeled 

two categories: traditional short-term plans (TSPs) and 

insured short-term plans (ISPs). 

TSPs would be similar to the short-term plans that were 

available before August 2018 but would provide coverage for up to 364 days rather than for three months. 

The terms of such plans vary widely, but most offer 

limited benefits and cover only a fixed amount for large 

expenses, such as inpatient hospital care. TSPs do not 

cover high-cost, low-probability events and therefore do 

not meet CBO’s definition of private health insurance.11

Estimating the actuarial value of such products is challenging because the scope of coverage is so varied and 

because coverage generally completely excludes services 

for any preexisting condition. CBO and JCT estimate 

that uninsured people with low expected health care 

costs who are ineligible for premium tax credits may be 

able to enroll in a TSP with premiums that are as much 

as 90 percent below those of the lowest-cost bronze plan 

available through a nongroup marketplace. However, 

many people who are eligible for premium tax credits 

or who are older or have higher expected health care 

spending would probably pay more for a TSP than for 

the lowest-cost bronze plan.

11. CBO broadly defines private health insurance coverage as a 

comprehensive major medical policy that, at a minimum, 

covers high-cost medical events and various services, including 

those provided by physicians and hospitals. See Congressional 

Budget Office, How CBO Defines and Estimates Health Insurance 

Coverage for People Under Age 65 (May 2018), www.cbo.gov/

publication/53822. 

CBO and JCT project that ISPs, unlike TSPs, will offer 

financial protection against high-cost, low-probability 

events. ISPs thus meet CBO’s definition of insurance. 

CBO and JCT expect that ISPs will resemble a typical 

nongroup insurance plan offered before 2014, when 

many federal regulations—for example, those governing 

essential health benefits and guaranteed issue—took 

effect. Although ISPs may exclude some benefits that 

other nongroup plans must cover, they may have lower 

deductibles or wider provider networks than plans in 

the fully regulated nongroup market. Premiums for ISPs 

will vary with individuals’ health characteristics but may 

be as much as 60 percent lower than premiums for the 

lowest-cost bronze plan for people with low expected 

health care costs who are ineligible for premium tax 

credits.

How Are the New Rules Expected to 

Change Coverage?

CBO and JCT estimated the number of people who 

would newly enroll either in an AHP or in a short-term 

plan as a result of the two final rules. The estimates 

account for increased enrollment resulting from the two 

rules but not for total enrollment in AHPs or short-term 

plans. The agencies’ analysis was confined to the effects 

of the rules and did not account for other recent administrative actions that could change the types of health 

insurance available to individuals or to employers.12

CBO and JCT anticipate that roughly 5 million more 

people will be enrolled in an AHP or a short-term plan 

each year over the next decade as a result of the new 

rules (see Table 1). Of that group, roughly 3 million 

would otherwise have been insured in the small-group 

market, 1 million would have had insurance through the 

nongroup market, and 1 million would have been uninsured. Almost three-quarters of the 5 million people who 

change coverage will purchase an AHP, CBO and JCT 

estimate, and the rest will purchase a short-term plan.

12. In particular, CBO and JCT did not consider the effects of 

the proposed rule on health reimbursement arrangements 

because their analysis was conducted in August 2018 before 

the notice of proposed rulemaking was published. See Health 

Reimbursement Arrangements and Other Account-Based Group 

Health Plans, 83 Fed. Reg. 54420 (October 29, 2018), https://

go.usa.gov/xP6tC. Similarly, the agencies did not account for 

the October 2018 guidance issued to states on waivers under 

section 1332 of the Affordable Care Act; see State Relief and 

Empowerment Waivers, 83 Fed. Reg. 53575 (October 24, 2018), 

https://go.usa.gov/xPz5Z.
January 2019 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS 7

Those movements represent a small share of the total 

number of people in each category. Specifically, CBO 

and JCT expect that of the people who would otherwise 

be uninsured altogether or who would be insured and 

receiving a premium tax credit for nongroup coverage, 

fewer than 5 percent will change their coverage status. 

The agencies anticipate that among people who would 

otherwise be insured in the nongroup market without a 

premium tax credit or who would otherwise be insured 

in the small-group market, fewer than 15 percent will 

switch to a new type of coverage. Those findings are 

consistent with estimates provided by other organizations (see below, “How Do CBO and JCT’s Estimates 

Compare With Other Analyses?”).

Movement From the Small-Group Market

The largest estimated change occurs for people who 

would otherwise be insured in the small-group market 

and who will move into a new AHP (see Figure 1). CBO 

and JCT estimate that, on average, roughly 3 million 

people who would have had small-group coverage in 

the regulated market will instead have AHP coverage 

under that rule (see Table 2). That group is the largest of 

those projected to change their coverage status, primarily because the small-group market is roughly twice the 

size of the nongroup market. Furthermore, enrollment 

in AHPs is expected to be higher among employers that 

already offer coverage than it is among employers that do 

not.

Movement From the Nongroup Market

The estimated movement among people with nongroup 

coverage is smaller in part because subsidies are available 

for nongroup coverage as long as that coverage is purchased through the marketplaces. People whose income 

is generally between 100 percent and 400 percent of 

the federal poverty guidelines (also called the federal 

poverty level, or FPL) are eligible for tax credits that 

reduce the price of the premium on the basis of income 

if they purchase nongroup coverage through a marketplace. Such individuals represented almost 60 percent of 

all people with nongroup coverage in 2018, CBO and 

JCT estimate. Those credits provide the most extensive 

subsidies to lower-income recipients and to recipients 

who are older and have higher premiums; they decrease 

as income rises and as premiums decrease. 

Because of the credits, CBO and JCT estimate, net premiums for TSPs and ISPs generally will be higher than 

those for bronze plans for people whose income is below 

300 percent of the FPL. CBO and JCT therefore expect 

that people with income below 300 percent of the FPL 

will be unlikely to purchase short-term plans. 

Table 1.

Projected Average Annual Enrollment With and Without the New Rules for AHPs and Short-Term Plans, 

2019 to 2028

With the New Rules

Without the 

New Rulesa

Coverage 

Status Changesb Coverage Status 

Stays the Same

(Millions of people) (Millions of people) (Percent) (Millions of people)

Uninsured 35.2 1.1 3 34.1

Insured in the Small-Group Market 23.2 3.1 13 20.1

Insured in the Nongroup Market With a Premium Tax Credit 6.9 0.2 3 6.7

Insured in the Nongroup Market Without a Premium Tax Credit 5.2 0.7 12 4.6

Total 70.5 5.1 7 65.5

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

AHP = association health plan.

a. The four categories are the groups that CBO and JCT identified as potentially affected by the new rules for AHPs and short-term plans. The numbers 

of people are CBO and JCT’s coverage projections before accounting for any likely effects of the new rules.

b. CBO and JCT expect that some short-term plans will not cover high-cost, low-probability events and therefore will not meet CBO’s definition of 

private health insurance. For more information, see Congressional Budget Office, How CBO Defines and Estimates Health Insurance Coverage for 

People Under Age 65 (May 2018), www.cbo.gov/publication/53822.
8 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS January 2019

Even for people whose income is between 300 percent 

and 400 percent of the FPL, CBO and JCT expect, 

bronze plans generally would be less costly than any 

short-term plan. Although most people who receive 

premium tax credits will pay less for a bronze health 

plan than for a short-term plan, CBO and JCT estimate 

that some young people with very low expected health 

care spending might pay less for a short-term plan and, 

therefore, switch coverage. The agencies estimate that in 

an average year, fewer than 50,000 people who would 

otherwise have purchased nongroup coverage with a tax 

credit will instead enroll in a short-term plan. 

Effects are anticipated to be larger among people 

whose income is too high to receive subsidies: CBO 

and JCT estimate that roughly 600,000 people who 

would otherwise have purchased nongroup coverage 

without a premium tax credit (about 10 percent of that 

population) will enroll in a short-term plan. The agencies also estimate that 95 percent of people moving from 

fully regulated nongroup coverage into short-term plans 

will purchase ISPs and that the remaining 5 percent will 

purchase TSPs. (Because TSPs are not expected to cover 

high-cost, low-probability events and therefore do not 

meet CBO’s definition of private health insurance, people moving from the nongroup market into TSPs would 

be considered uninsured.) 

Several factors led CBO and JCT to anticipate that 

most new enrollment in short-term plans will be in ISPs 

rather than TSPs. First, interviews with insurers and 

other stakeholders suggested that most people would 

prefer more comprehensive insurance coverage to TSPs, 

and many insurers indicated a preference for offering 

more substantial coverage. In addition, enrollment data 

for the nongroup market as a whole that predate 2014 

Figure 1.

Estimated Average Annual Enrollment of People Who Are Projected to Change Their Insurance Coverage 

Because of the New Rules for AHPs and Short-Term Plans, 2019 to 2028

Number of People

Nongroup Market (0.9 million)

Small−Group Market (3.1 million)

Uninsured (1.1 million)

AHPs (3.7 million)

ISPs (1.2 million)

TSPs (0.2 million)

Without the New Rules With the New Rules

Total: 5.1 Million People Total: 5.1 Million People

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

The estimated 5.1 million people whose coverage will be affected by the new rules represent less than 10 percent of people who otherwise would be 

uninsured or would be insured through the small-group or nongroup market.

TSPs do not cover high-cost, low-probability events and therefore do not meet CBO’s definition of private health insurance. For more information, 

see Congressional Budget Office, How CBO Defines and Estimates Health Insurance Coverage for People Under Age 65 (May 2018), www.cbo.gov/

publication/53822.

AHP = association health plan; ISP = insured short-term plan; TSP = traditional short-term plan.
January 2019 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS 9

(when many of the regulations governing nongroup 

insurance coverage took effect) suggest that the number 

of people who purchased coverage resembling ISPs was 

far greater than the number purchasing coverage that 

resembled TSPs. 

New Short-Term Coverage Among 

Previously Uninsured People

CBO and JCT also expect a small number of currently 

uninsured people to purchase short-term plans. That 

group includes younger and healthier people who are 

not eligible for premium tax credits. They are likely to 

see short-term plans with premiums that are significantly 

lower than the lowest-cost option available through the 

fully regulated nongroup market. CBO and JCT estimate that roughly 600,000 people will gain insurance 

coverage by purchasing ISPs as a result of the short-termplan rule. Only about 100,000 people will purchase 

TSPs and thus, in CBO and JCT’s projections of health 

insurance coverage, will remain uninsured.

New Offers of Coverage by Employers

CBO and JCT expect that a small number of employers 

who otherwise would not have offered coverage will start 

offering AHP coverage to their employees. The agencies 

estimate that, on average, 400,000 people will have new 

AHP coverage who otherwise would be uninsured over 

the 2019–2028 period. (A smaller number who would 

have been insured in the nongroup market would be 

expected to receive an employment-based offer of AHP 

coverage.) Although most people will probably accept 

the newly offered employment-based coverage, CBO and 

JCT estimate that roughly 5 percent will decline (see the 

section on key technical inputs). 

Eligibility for the premium tax credits for nongroup coverage purchased through the marketplaces is conditional 

on not having an affordable offer of insurance through 

an employer. As a result of those new affordable offers 

of AHP coverage (which would meet CBO’s definition 

of insurance), CBO and JCT estimate that a very small 

number of people will receive but decline an affordable 

AHP offer, which will cause them to lose eligibility for 

the premium tax credits and to become uninsured.

What Are the Greatest Sources of 

Uncertainty in the Estimates?

CBO and JCT’s estimates of the effects of the AHP 

and short-term-plan rules aim to represent the middle 

of an extremely broad range of possible outcomes. The 

projections are inherently uncertain in large part because 

of legal and administrative questions. There is considerable uncertainty regarding the Administration’s implementation and enforcement of the new rules—for example, the AHP rule includes language suggesting that the 

Administration might preempt state laws that limit the 

new rule’s effects. To the extent that the Administration 

challenges state laws, such actions might affect the 

availability of various types of insurance coverage. 

Furthermore, both rules are facing court challenges.13

Some questions about how insurers, states, employers, 

individuals, and other affected parties will respond to the 

new rules cannot be answered definitively. Considerable 

change has occurred in the nongroup and small-group 

markets in recent years; the market fluctuations caused 

by mergers and by the entry and exit of insurers, for 

13. See New York v. Department of Labor, No. 18-1747 (D.D.C. 

filed July 26, 2018); and Association for Community Affiliated 

Plans v. Department of the Treasury, No. 18-2133 (D.D.C. filed 

September 24, 2018). 

Table 2.

Estimated Average Annual Enrollment of People 

Who Are Projected to Change Their Insurance 

Coverage Because of the New Rules for AHPs and 

Short-Term Plans, 2019 to 2028

Millions of People

Coverage Status

Without the 

New Rules

Coverage Status 

With the New Rules

AHP TSP ISP

Uninsured 1.1 0.4 0.1 0.6

Insured in the Small-Group Market 3.1 3.1 * *

Insured in the Nongroup Market 0.9 0.2 * 0.6

Total 5.1 3.7 0.2 1.2

Sources: Congressional Budget Office; staff of the Joint Committee on 

Taxation.

The estimated 5.1 million people whose coverage will be affected by 

the new rules represent less than 10 percent of people who otherwise 

would be uninsured or would be insured through the small-group or 

nongroup market.

TSPs do not cover high-cost, low-probability events and therefore do not 

meet CBO’s definition of private health insurance. For more information, 

see Congressional Budget Office, How CBO Defines and Estimates 

Health Insurance Coverage for People Under Age 65 (May 2018), 

www.cbo.gov/publication/53822. 

AHP = association health plan; ISP = insured short-term plan; 

TSP = traditional short-term plan; * = between zero and 49,000 people.
10 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS January 2019

example, make forecasting people’s responses more tenuous than might be possible under more stable conditions.

Although CBO and JCT interviewed a wide range of 

stakeholders about how people might respond to the 

two rules, the new types of AHPs and short-term plans 

that insurers will actually offer—and the premiums that 

they charge—may differ considerably from those that 

CBO and JCT have modeled. Different plan offerings 

or pricing would affect enrollment in the new plans, the 

characteristics of the enrollees those plans attract, and the 

resulting effects on the fully regulated small-group and 

nongroup markets.

States also will react in ways that could affect the types 

of plans offered and their enrollments. Some states have 

taken regulatory actions to block the rules from taking effect. When the rule on short-term plans was first 

proposed, three states—Massachusetts, New Jersey, and 

New York—already had rules banning such short-term 

plans, and other states had policies that limited the initial 

or total contract duration of short-term plans. Between 

publication of the proposed and the final rules, more 

states acted to prohibit or limit the sale of short-term 

coverage. CBO and JCT’s current estimates reflect state 

governments’ policies in place as of September 2018 (see 

the section on key technical inputs). 

At the time that CBO and JCT conducted the analysis, 

other states were considering actions that might 

strengthen the effect of the proposed rules. For example, 

New Hampshire was evaluating how to amend state law 

to better conform to federal law and to ease the burden 

on insurers and associations offering new AHPs. Because 

some states were considering legislation that would 

enhance the effects of the final rules and other states were 

considering legislation that would dampen such effects, 

for this analysis, CBO and JCT did not attempt to 

project state actions into the future.

Finally, states could create other mechanisms for people 

to purchase coverage that is exempt from the regulations 

on small-group and nongroup markets. Iowa, for example, has enacted legislation authorizing the sale of “health 

benefit plans” through its Farm Bureau. Because the state 

does not define those plans as insurance, they need not 

comply with the federal or state regulations for nongroup 

and small-group coverage. CBO and JCT expect that 

the availability of such state-specific products will reduce 

enrollment in AHPs and short-term plans but will nevertheless increase enrollment outside of the fully regulated 

markets. 

How Do CBO and JCT’s Estimates Compare 

With Other Analyses?

CBO and JCT’s assessment of the effects of the rules 

concerning AHPs and short-term plans is in line with 

other published analyses, although comparing results 

is difficult because the policy scenarios evaluated are 

different. (Those sources are listed in this report’s selected 

bibliography.)14 In particular, CBO and JCT found only 

one study, Covered California (2018), that analyzed 

the effects of both rules jointly. As a further complication, several studies of the rule for short-term plans 

presented combined findings for the effects of that rule 

and for repealing the requirement for individuals to have 

insurance. 

Table 3 and Table 4 compare CBO and JCT’s estimates 

of the effects of the rules after full implementation with 

14. For another analysis of the various estimates of short-term plans, 

see Pope (2018) in the selected bibliography.

Table 3.

Estimates of Annual Enrollment in AHPs and ShortTerm Plans Resulting From the New Rules for AHPs 

and Short-Term Plans

Millions of Enrollees

Published Source Year Enrollment

AHPs

Avalere Health, 2018 2022 2.4 to 4.3

CBO and JCT 2022 4.6

Short-Term Plans

Rao, Nowak, and 

Eibner, 2018

Not 

specified

Negligible 

to 5a

Wakely Consulting Group, 2018 After 4 years 1.1 to 1.9b

Federal Register, 2018 2028 1.4

CBO and JCT 2028 1.6

Center for Health and Economy, 2018 2028 3.2

Blumberg, Buettgens, and Wang, 2018a, b 2019 4.3a

Sources: Congressional Budget Office; staff of the Joint Committee on 

Taxation.

AHP = association health plan.

a. Includes the effects of repealing the requirement for individuals to 

have insurance.

b. Includes only the number of people leaving the nongroup market.
January 2019 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS 11

the estimates of other organizations. CBO and JCT’s 

estimates, shown in those tables, are larger than the 

enrollment numbers presented earlier in this report 

because those earlier numbers are 10-year averages, 

which encompass several years during which the effects 

of the rules will be phased in. CBO and JCT expect that 

the markets will respond to the rules over several years 

and that the effects of both rules will be fully evident by 

2022.

CBO and JCT’s estimates of enrollment in the new types 

of plans are similar to those of other organizations. For 

example, CBO and JCT estimate that, in 2022, roughly 

4.6 million people will newly enroll in AHPs and that, 

in 2028, roughly 1.6 million people will newly enroll 

in short-term plans as the result of the rules (see Table 

3). Although CBO and JCT’s estimate of enrollment in 

AHPs in 2022 is slightly above the range of the other 

comparable estimate, the agencies’ estimate of enrollment in short-term plans is within the broad range of 

estimates by other organizations. 

The agencies’ estimates of premium increases in the 

nongroup market also are similar to those of other 

organizations, which range up to 9 percent (see Table 4). 

As of December 2018, CBO and JCT had found no 

analyses of the effects of the rules on premiums in the 

fully regulated small-group market.

What Key Technical Inputs 

Did CBO and JCT Use?

CBO and JCT developed several key technical inputs 

for the model that serves as this report’s foundation. The 

agencies relied on research from various sources—listed 

in the selected bibliography—in developing and applying 

those inputs to estimate various populations’ responses to 

new health insurance options (see Table 5). 

Elasticities for Small Employers and for 

Individuals in the Nongroup Market 

In economic research, price elasticity is a summary 

measure of the extent to which purchasing decisions 

are influenced by changes in price. CBO and JCT 

considered two inputs: purchase elasticity and crossprice elasticity.15 Purchase elasticity measures changes 

15. In the economic literature, elasticities are often referred to as 

being on the extensive margin (whether to purchase or not) or 

the intensive margin (the amount to purchase). This report refers 

to the extensive margin as purchase elasticity.

in employers’ and individuals’ decisions to purchase 

coverage (either on behalf of employees or as individuals) 

in response to changes in premiums. Cross-price elasticity measures how readily people will switch between 

sources of insurance coverage in response to changes in 

premiums. 

Research suggests that cross-price elasticities are much 

larger than purchase elasticities: That is, people respond 

to price changes by switching between plans more readily 

once they have decided that insurance coverage is something they want. (Although employers and individuals 

alike tend to view their current insurance as the default, 

the literature and interviews with insurers and stakeholders suggest that even with that tendency to renew 

coverage, cross-price elasticities are larger. This may be 

particularly true in the nongroup and small-group markets, which have been changing rapidly in recent years.) 

Table 4.

Estimates of Premium Increases in the Fully 

Regulated Nongroup Market Resulting From the 

New Rules for AHPs and Short-Term Plans

Percentage Increase

Published Source Year

Premium 

Increase

AHPs and Short-Term Plans

Covered California, 2018 2021 1.3 to 5.4

CBO and JCT 2028a 3

AHPs

Corlette, Hammerquist, and Nakahata, 2018 Not specified 1.4 to 4.4

Avalere Health, 2018 2022 3.5

Short-Term Plans

Rao, Nowak, and 

Eibner, 2018

Not 

specified

Negligible 

to 3.6b

Wakely Consulting Group, 2018 After 4 years 2.2 to 6.6

Federal Register, 2018 2028 5

Center for Health and Economy, 2018 2028 1 to 9

Sources: Congressional Budget Office; staff of the Joint Committee on 

Taxation.

AHP = association health plan.

a. CBO and JCT estimate that in 2021, premiums for nongroup coverage 

sold in the fully regulated markets would be 2 percent higher as a 

result of the two rules. However, the effects of both rules will not be 

fully evident until 2022.

b. Includes the effects of repealing the requirement for individuals to 

have insurance.
12 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS January 2019

For health insurance, elasticities are expressed as negative 

numbers because people are less inclined to purchase 

coverage when premiums rise.

In the models for AHPs and short-term plans, CBO and 

JCT used elasticities to anticipate people’s choices about 

nongroup coverage and employers’ choices for smallgroup coverage. The agencies estimated those elasticities 

through a review of the literature cited in the selected 

bibliography. In the small-group market, the elasticity 

for small employers that did not currently offer coverage 

is estimated at –0.38, and for small employers that did 

offer coverage, it is estimated at –0.76. In the nongroup 

market, CBO and JCT estimated, the purchase elasticity 

for coverage among people who are currently uninsured 

is –0.59, and the cross-price elasticity for people currently insured in the nongroup market is –1.18. (An 

elasticity of –0.59 implies that if premiums increase by 

10 percent, the number of people with coverage will 

decrease by 5.9 percent.) 

Take-Up Rates for People With Offers of Coverage 

From a Small Employer

After identifying small employers that would offer AHP 

coverage under the new rule, CBO and JCT examined 

take-up rates—the percentage of eligible people who 

actually enroll. For most populations, CBO and JCT 

used the take-up rates that they estimate as part of 

their health insurance projections. Those rates tend to 

be around 75 percent or 80 percent: That is, between 

75 percent and 80 percent of the people who are offered 

coverage through a small employer accept that offer. 

In some instances, CBO and JCT adjusted the rate to 

reflect certain populations’ characteristics. A lower rate 

was used for people who, in the projections, would have 

an offer of employment-based insurance coverage in the 

absence of the two final rules but would choose not to 

take up that offer. A higher rate was used for people who 

expressed a strong preference for insurance (such as those 

who, in the absence of the new rules, would purchase 

nongroup coverage without a tax credit). Finally, CBO 

and JCT expect that most people who are projected 

to have insurance through a small employer would 

Table 5.

CBO and JCT’s Use of Technical Inputs to Estimate the Effects of the Rules on AHPs and Short-Term Plans

AHPs

The number of people in uninsured families 

who work for small employers that do not offer 

any health insurance without the rule change 8.9 milliona

The percentage of small employers that do 

not offer any health insurance coverage 

and are potential purchasers of AHPs × 60 percent

The average change in the 

small-employer premium × -30 percent

The elasticity of small employers that do not 

currently offer coverage with respect to premiums × -0.38

The share of people who accept their 

employer’s offer of coverage × 80 percent

The projected number of people who are 

uninsured and gain family coverage through a 

small employer that begins to offer an AHP 500,000a

 Insured Short-Term Plans

The number of people with family marketplace 

coverage and income above 400 percent 

of the FPL without the rule change 1.0 milliona

The percentage of families with family 

marketplace coverage and income above 400 

percent of the FPL who are potential purchasers × 60 percent

The average change 

in the family premium × -55%

The elasticity of current nongroup market 

enrollees with respect to premiums × -1.18

The share of people who live in states that 

allow ISPs under federal regulations × 60 percent

The projected number of people with income 

above 400 percent of the FPL who switch from 

family marketplace coverage to family ISPs 200,000a

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

AHP = association health plan; FPL = federal poverty level; ISP = insured short-term plan.

a. Rounded to the nearest hundred-thousand people.
January 2019 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS 13

retain that coverage, regardless of whether the employer 

switched to an AHP or continued to offer fully regulated 

coverage.

Effects of State Policies to Prevent 

Implementation of the Rules

AHPs and short-term plans are subject to federal and 

state regulation that in some cases could prevent the two 

new final rules from taking full effect. In their modeling, CBO and JCT reduced estimated enrollment in 

short-term plans by almost 40 percent to account for the 

possible mitigating effects of state laws, which can take a 

variety of forms but may include any of the following:

• Prohibitions on the sale of short-term plans; 

• Requirements that short-term plans comply with 

guaranteed issue, community rating, and coverage of 

essential health benefits (regulations that govern the 

nongroup market); and 

• Limiting enrollment in short-term plans to periods of 

as little as three or six months. 

At the time that CBO and JCT conducted the analysis, the states of California, Hawaii, Illinois, Maryland, 

Massachusetts, New Jersey, New York, Oregon, Vermont, 

and Washington had laws in place that could be expected 

to nullify the effects of the new rule for short-term plans. 

Other states had laws that would reduce but not eliminate the effects, and none had enacted legislation that 

would augment the effects of the new rule. The selected 

bibliography lists the sources CBO and JCT consulted. 

The agencies will account for future changes to state laws 

during regular updates to their baseline projections of 

health insurance coverage.

CBO did not make a similar adjustment for the AHP 

rule because the extent to which states’ policies will preclude the expansion of AHPs is not clear, nor is it clear 

whether the Administration will seek to preempt state 

laws that attempt to limit the possibility of expansion.
Selected Bibliography

External Analyses of the Rules on Association Health 

Plans and Short-Term Plans

Avalere Health. 2018. Association Health Plans: Projecting 

the Impact of the Proposed Rule, Table 2, http://tinyurl.

com/yb6plqdh.

Blumberg, Linda J., Matthew Buettgens, and Robin 

Wang. 2018a. Updated: The Potential Impact of ShortTerm Limited-Duration Policies on Insurance Coverage, 

Premiums, and Federal Spending, Urban Institute Brief 

(March 14), http://tinyurl.com/y7879qw2.

Blumberg, Linda J., Matthew Buettgens, and Robin 

Wang. 2018b. Three Ways Short-Term Health Plans Could 

Damage the US Health System, Urban Wire: Health and 

Health Policy (August 2), http://tinyurl.com/ydhnt5s8.

Center for Health and Economy. 2018. “The Proposed 

Modifications to Short Term Limited Duration 

Insurance Plans” (blog entry, June 25), http://tinyurl.

com/y9zgfe4f.

Centers for Medicare & Medicaid Services. 2018. 

“Estimated Financial Effects of the Short-Term, LimitedDuration Policy Proposed Rule” (memorandum, 

April 6), https://go.usa.gov/xPVjz.

Corlette, Sabrina, Josh Hammerquist, and Pete 

Nakahata. 2018. “New Rules to Expand Association 

Health Plans: How Will They Affect the Individual 

Market?” The Actuary (web exclusive, May), https://

tinyurl.com/yavdxagj.

Covered California. 2018. Individual Markets Nationally 

Face High Premium Increases in Coming Years Absent 

Federal or State Action, With Wide Variation Among 

States (March 8), http://tinyurl.com/y96guou8 (PDF, 

547 KB).

Federal Register. 2018. Short-Term, Limited-Duration 

Insurance, 83 Fed. Reg. 38212, Table 2, pp. 38236–

38237 (August 3), https://go.usa.gov/xEcKs.

Pope, Christopher. 2018. “Evaluating Assessments of 

Short-Term Insurance Deregulation,” Health Affairs Blog, 

Exhibit 1 (May 9), http://tinyurl.com/y9xbps6k.

Rao, Preethi, Sarah Nowak, and Christine Eibner. 

2018. What Is the Impact on Enrollment and Premiums 

If the Duration of Short-Term Health Insurance Plans Is 

Increased? Commonwealth Fund Report (June), http://

tinyurl.com/y7mgbg4f.

Wakely Consulting Group. 2018. Effects of Short-Term 

Limited Duration Plans on the ACA-Compliant Individual 

Market, Table 1 (report prepared for the Association 

for Community Affiliated Plans), http://tinyurl.com/

y7ccesj7.

Developing Elasticities

Auerbach, David, and Sabina Ohri. 2006. “Price 

and the Demand for Nongroup Health Insurance,” 

Inquiry, vol. 43, no. 2 (May), pp. 122–134, https://doi.

org/10.5034%2Finquiryjrnl_43.2.122.

Blumberg, Linda J., Len M. Nichols, and Jessica S. 

Banthin. 2001. “Worker Decisions to Purchase Health 

Insurance,” International Journal of Health Care Finance 

and Economics, vol. 1, no. 3–4 (September), pp. 305–

325, http://tinyurl.com/y8na3wgv.

Congressional Budget Office. 2005. The Price Sensitivity 

of Demand for Nongroup Health Insurance (August), 

www.cbo.gov/publication/17110.

Congressional Budget Office. 2000. Increasing SmallFirm Health Insurance Coverage Through Association 

Health Plans and HealthMarts (January), www.cbo.gov/

publication/12066.

Gumus, Gulcin, and Tracy L. Regan. 2013. “Tax 

Incentives as a Solution to the Uninsured: Evidence 

From the Self-Employed,” Inquiry, vol. 50, 

no. 4 (November), pp. 275–295, https://doi.

org/10.1177/0046958014522913.
January 2019 HOW CBO AND JCT ANALYZED COVERAGE EFFECTS OF NEW RULES FOR ASSOCIATION HEALTH PLANS AND SHORT-TERM PLANS 15

Gruber, Jonathan, and Michael Lettau. 2004. “How 

Elastic Is the Firm’s Demand for Health Insurance?” 

Journal of Public Economics, vol. 88, no. 7–8 

(July), pp. 1273–1293, https://doi.org/10.1016/

S0047-2727(02)00191-3.

Hadley, Jack, and James D. Reschovsky. 2002. “Small 

Firms’ Demand for Health Insurance: The Decision to 

Offer Insurance,” Inquiry, vol. 39, no. 2 (May), pp. 118–

137, https://doi.org/10.5034/inquiryjrnl_39.2.118.

Heim, Bradley T., and Ithai Z. Lurie. 2009. “Do 

Increased Premium Subsidies Affect How Much Health 

Insurance Is Purchased? Evidence From the SelfEmployed,” Journal of Health Economics, vol. 28, no. 6 

(December), pp. 1197–1210, https://doi.org/10.1016/j.

jhealeco.2009.07.002.

Krueger, Alan B., and Ilyana Kuziemko. 2013. “The 

Demand for Health Insurance Among Uninsured 

Americans: Results of a Survey Experiment and 

Implications for Policy,” Journal of Health Economics, 

vol. 32, no. 5 (September), pp. 780–793, https://doi.

org/10.1016/j.jhealeco.2012.09.005.

Marquis, M. Susan, and Stephen H. Long. 1995. 

“Worker Demand for Health Insurance in the 

Non-Group Market,” Journal of Health Economics, 

vol. 14, no. 1 (May), pp. 47–63, https://doi.

org/10.1016/0167-6296(94)00035-3.

Nichols, Len, and Linda J. Blumberg, Estimating 

Employer Elasticity of Demand for Health Insurance (paper 

presented at Academy Health Annual Research Meeting, 

Washington, D.C., 1999).

State Policies Regarding Short-Term Plans

Blumberg, Linda J., Matthew Buettgens, and Robin 

Wang. 2018a. Updated: The Potential Impact of ShortTerm Limited Duration Policies on Insurance Coverage, 

Premiums, and Federal Spending, Urban Institute Brief 

(March 14), http://tinyurl.com/y7879qw2.

Commonwealth Fund. 2018. “What Is Your State 

Doing to Affect Access to Adequate Health Insurance?” 

(accessed August 29, 2018), http://tinyurl.com/

y8t5929t.

Lucia, Kevin, and others. 2018. State Regulation 

of Coverage Options Outside of the Affordable Care 

Act: Limiting the Risk to the Individual Market, 

Commonwealth Fund (March 29), http://tinyurl.com/

y8hhhogo.

Norris, Louise. 2018. “‘So Long’ to Limits on ShortTerm Plans,” HealthInsurance.org (accessed August 29, 

2018), http://tinyurl.com/y7qbpo9l.
About This Document

This document, which is part of the Congressional Budget Office’s continuing effort to make its 

work transparent, explains how CBO and the staff of the Joint Committee on Taxation estimated 

the coverage changes associated with new rules that were aimed at increasing health insurance 

coverage either through association health plans or through short-term, limited-duration 

insurance. In keeping with CBO’s mandate to provide objective, impartial analysis, the report 

makes no recommendations. 

Alice Burns and Kevin McNellis wrote the report with contributions from Kate Fritzsche, 

Philippa Haven, and Keren Hendel and with guidance from Chad Chirico, Leo Lex, and 

Sarah Masi. Alissa Ardito, Elizabeth Bass, Susan Yeh Beyer, and Sebastien Gay commented, as 

did the staff of the Joint Committee on Taxation. 

Comments also were provided by Katherine Baicker of the University of Chicago Harris 

School of Public Policy, Michael Cohen of the Wakely Consulting Group, Sabrina Corlette and 

Kevin Lucia of the Center on Health Insurance Reforms at the Georgetown University Health 

Policy Institute, and Preethi Rao of RAND Corporation. The assistance of external reviewers 

implies no responsibility for the final product, which rests solely with CBO.

Jeffrey Kling and Robert Sunshine reviewed the report, Kate Kelly edited it, Kim Kowalewski 

created the figure, and Casey Labrack prepared the report for publication. An electronic version is 

available on CBO’s website (www.cbo.gov/publication/54915). 

CBO seeks feedback to make its work as useful as possible. Please send comments to 

communications@cbo.gov.

Keith Hall

Director

January 2019