Association Health Plans Bill Passes House
A measure allowing small employers to band together to obtain affordable group health care coverage was approved by the House of Representatives on July 26, and has moved to the Senate for consideration. The proposed legislation would create association health plans (AHPs), permitting small businesses to pool their purchasing power and buy health coverage across state lines. Because they would operate nationally, AHPs would not be subject to state health insurance mandates.
House members passed the Small Business Health Fairness Act (H.R. 525) by a 263-165 vote. The House has approved a number of AHP bills in previous years, but the measures failed in the Senate.
Proponents of H.R. 525 claim AHPs would lower overhead costs for small businesses providing health coverage by as much as 30%, and decrease the number of uninsured American workers. Critics of the bill, including patient advocacy groups and insurers, contend the plans would fail to provide adequate insurance coverage and potentially penalize companies with older and sicker employees, causing their premiums to rise. In addition, AHP opponents suggest the state's lack of oversight could lead to health insurance fraud.
"Small business owners and their employees are clamoring for relief from the high costs of health insurance. It's high time Congress did something about it," said Rep. Sam Johnson (R-TX), a member of the House Education and the Workforce Committee and the bill's lead sponsor.
"This bill has had unwavering support in the House for nearly a decade now. The other body is taking a serious look at the legislation this year, and it’s a priority in the president’s health care agenda," Johnson added. "I look forward to working with our colleagues to make this bill law this year." Andrews further argued that AHPs have the potential to exploit American workers, comparing them to now defunct plan types that failed to pay promised benefits.
An alternative proposal, introduced by Rob Andrews (D-NJ) and Ron Kind (D-WI), both members of the House Education and the Workforce Committee, would create a national health insurance pool of state-licensed insurers for small businesses and would not preempt state laws. The Democratic plan would also subsidize health insurance premiums for small businesses and their employees.
Referring to H.R. 525, Andrews said the Republican-backed "health plan for small businesses will only exacerbate the problem of the uninsured and eviscerate the protection of a patient’s right to important procedures and benefits like mammograms, hospital stays after Cesarean sections, mental health benefits and rights to appeal HMO decisions."
Andrews further argued that AHPs have the potential to exploit American workers, comparing them to now-defunct plan types that failed to pay promised benefits. This point was also emphasized by Georgetown University assistant research professor Mila Kofman in a study on the potential for insurance fraud among AHP providers.
"The regulatory approach contemplated in the AHP legislation would leave many businesses and workers at the mercy of scam operators," Kofman warned. "The consequences are predictable: bankruptcy, delayed or foregone medical care, and loss of coverage for America’s businesses and workers."
Kofman and other AHP critics claim the U.S. Department of Labor (DOL), which would be responsible for regulating plans at the federal level, lacks the tools and resources to police plans as effectively as state insurance regulators.
Sandy Praeger, secretary-treasurer of the National Association of Insurance Commissioners (NAIC), agreed with Kofman’s assessment, warning that allowing "federal AHPs to operate outside the authority of state protection will expose consumers to more fraud and insurance scams."
But AHP supporters maintain that the plans would bring badly needed relief to small businesses currently struggling to afford health care coverage for their employees. Senator Olympia Snowe (R-ME), senior member of the Senate Finance Committee, has introduced a Senate version of the House bill, S. 406.
Commenting on the passage of H.R. 525, Snowe said, "The American people have consistently and overwhelmingly told Congress that access to health insurance and the explosive growth in premiums are a major concern.
"In the interest of basic fairness, as well as the continued health of small business employees and our economy, this dire situation must be addressed," Snowe added. "The time for providing relief to the men and women who are the foundation of job creation and sustained economic growth has arrived. The Senate must pass AHP legislation this year so millions of small business owners can provide affordable health insurance choices to our nation's most indispensable employees."
