August 5, 2005--Association health plans took one step closer to becoming a law last week when a bill to allow their creation passed the House of Representatives.

The Small Business Fairness Act, or H.R. 525, was passed by a vote of 263-165. The act allows small businesses to pool their resources into a group health plan and purchase health insurance collectively, crossing state-lines to bargain for lower rates from national insurers.

According to the U.S. Chamber of Commerce, of the 45 million uninsured Americans nearly 60% are employed by small businesses. Congressional research indicated that 2 million previously uninsured would receive health insurance, and that 7.5 million people total would receive inexpensive insurance under the Act.

The research estimated that the average business would save 15% to 30% of current health care costs, due to small business owners having the bargaining power of collective negotiations. Administrative costs would likewise be cheaper, not having to deal with the complication of adhering to 50 different state guidelines, but a single set of federal guidelines. AHPs fall under the same set of federal regulations and protections that govern large companies and union insurance plans.

With the Small Business Fairness Act passed in the House, it moves to the Senate for discussion and voting in September. Known as S.406, it is expected to receive changes and further regulations before approval by the Senate. Once approved, President Bush is expected to sign it into law.