Associated Health Plans Still Up for Debate
April 26, 2005--The lack of consensus towards creating Association Health Plans (AHPs) could lead to a "compromise legislation" in the Senate that would use the premise of an AHP proposal but also include other approaches like streamlining state insurance regulations and easing costly benefit mandates, said the Senate Health, Education, Labor and Pensions Committee (HELP) chairman, U.S. Senator Michael Enzi (R-Wyo.).
Advocates of AHPs--or federally regulated insurance pools--have said that small businesses should be able to pool their purchasing power to enjoy some of the advantages that large employers have. AHPs could be the way to bring that power to small businesses, say advocates. But critics have opposed the idea on the account that AHPs could ultimately end up driving premiums even higher.
The committee's hearing on April 21 was the first effort during the current Congressional session to address support for legislation allowing national AHPs. The issue of AHPs has been a fairly divisive one in the House: None of the Democrats from the Senate's committee were present at the first hearing.
Senator Enzi has said that the panel is committed to achieving "serious and meaningful reform" of small business health insurance markets.
"We have had almost five full years of devastating double-digit growth in insurance premiums, which amounts to five times the rate of inflation. Since 2000, premiums for family coverage have grown nearly 60%, compared to inflation of 9.7% over the same period," said Enzi.
Wyoming, Senator Enzi's home state, was ranked 47th in the percentage of businesses that offer health insurance to their employees.
"Clearly, small business needs relief -- quickly," he said.
The National Federation of Independent Businesses (NFIB) supports AHPs as a strong route to make health insurance coverage affordable to small businesses.
But AHPs' critics feel it could result in "cherry picking" of healthy individuals from insurance groups and result in an unhealthy segmentation of the insurance market.
"The concern is that AHPs would make rates go down for a minority of small businesses, but it would lead to an increase in premiums for the most," said John Morrison, Montana State Auditor and insurance commissioner who is a member of the National Association of Insurance Commissioners (NAIC).
Morrison suggested tax credits for small businesses as an alternative to AHPs. Montana currently offers tax credits to the tune of $100 per employee per month, he said.
According to an organization called America's Health Insurance Plans, insurers are combining high deductible coverage with Health Savings Accounts, or HSAs, to offer affordable policies. This could be an alternative to the association health plans, it said.
Figures released by the organization suggest that a million Americans have signed up for HSAs in the 16 months they have been available. Just under 40% of those were previously uninsured.