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About Association Health
Plan Legislation:
Bad for Small Business The Issue: Legislation to create
Association Health Plans (AHPs) would exempt these plans from most state
regulations and minimum standards. Preemption of AHPs from these state
laws would: Splinter the Small Business Market,
Rather than Bring Purchasing Clout
AHPs could design their own benefit plans in ways
that would not be attractive to older and sicker participants, leaving
those AHPs with better risks. Most competition would be over attracting better
risks, rather than negotiating lower-cost health care. Organizations with a younger/healthier population
would start AHPs; those with an older/sicker population would not. AHPs could set rates based upon their own pools
and charge individual employers within the association rates that exceed
permissible limits under state law. CBO estimates that simply securing
better risks for their pools would account for two-thirds of AHP’s
potential cost advantage. The rest would come from simply eliminating
benefits. The 80 percent of small business employees not
participating in AHPs would almost uniformly see their premiums increase
(CBO). The group purchasing advantage would shift from
local groups to national groups, who have less of a stake in the
community
Leave Consumers Without Sufficient Protections
Self-Insured AHPs would be exempt from all state
regulations: solvency requirements, consumer protection rules, and
benefit mandates. These AHPs would be placed under the jurisdiction of
the U.S. Department of Labor. Similar organizations, known as MEWAs (Multiple
Employer Welfare Arrangements) left at least hundreds of thousands of
consumers with untold millions of unpaid claims before being more
strictly regulated in 1983. AHP legislation sets the stage for their
return. The Department of Labor clearly has insufficient
resources to oversee and regulate these self-insured AHPs.
Fail to Increase Health Insurance Access
CBO estimates that those individuals switching
from another form of coverage to an AHP would outnumber the newly
insured by 14-to-1. An Urban Institute study found that AHPs would
increase the number of uninsured. CBO estimates that 20 million individuals would
face additional rate increases and up to 100,000 of the sickest
individuals would lose coverage entirely.
Full text in PDF format:
H.R. 660 |
S. 545 |
