Association Health Plans Gain Traction in Senate
March 2, 2006--A bill that would allow small businesses to purchase insurance directly from trade associations and industry groups may be gaining some traction in the Senate after years of standstill on the issue, and will be considered in committee next Wednesday.
The Senate’s Committee on Health, Education, Labor, and Pensions will take up a bill sponsored by Sen. Mike Enzi (R-Wyo.) that would allow small businesses to participate in association health plans -- the first time such legislation has made it this far in the Senate.
Enzi’s proposal, which is likely to be altered in some form by the committee, may stand as a landmark of sorts for supporters of AHPs. Similar legislation -- also referred to as small-business health plans -- has been considered by the House of Representatives eight times in the last 11 years, without ever coming to a full Senate vote.
AHPs, long touted by President Bush as a free-market salve against rising insurance costs, would let small-business owners band together across state lines and purchase insurance policies directly from established industry and business groups. The current bill, which would appoint a “Commission on Health Insurance Standards Harmonization,? would also require any groups issuing insurance to have been in continuous operation for three years.
Industry groups, not surprisingly, are among the most ardent proponents of AHP legislation. The National Federation of Independent Business, along with the U.S. Chamber of Commerce and numerous other trade organizations, have offered their support for AHPs. If the bill is approved, it would vault many organizations into the insurance business.
Amanda Austin, the NFIB’s manager of legislative affairs for the Senate, said the bill represents a revision of similar legislation introduced in 2005 by Sen. Olympia Snowe (R-Maine) and Sen. Jim Talent (R-Mo.), and that the new version has an excellent chance of getting out of the Senate committee. The Enzi bill, Austin said, would inject much-needed choice into the small-group health-care industry and would allow the NFIB to offer insurance directly to its more than 600,000 members.
“We’ll all be competing against each other,? Austin said of her fellow business groups, “to fill a very important need in the market.?
Both proponents and detractors of AHPs agree that regulation of the insurance market is the crux of the debate. AHP supporters see the legislation as a way to provide business owners relief from burdensome state insurance regulations. Detractors view these existing state insurance regulations as protections for health-care consumers.
While the Enzi bill expands the market for small-business owners, it is not mandate-free. If approved, the bill would federalize any specific health-care treatments required by at least 45 states. State coverage requirements, however, are widely divergent, and very few treatments would fall into the federal category.
The National Governors Association, which has opposed past attempts to pass AHP legislation, issued a report that lists the commonalities in each state’s treatment requirements. According to the report, there are only four treatments that must be covered by insurance providers in at least 45 states -- mammography, alcohol-abuse treatment, chiropractic care, and optometry.
Because of the Enzi bill’s wide scope, Ron Pollack, executive director of Families USA, a national health-care consumer group, said it is actually much more damaging than the Snow-Talent proposal. Enzi’s bill, he said, would eliminate important state regulations protecting the insured.
The bill “creates an arbitrarily stringent requirement that, for a state rule to survive, it’s got have been adopted by at least 44 other states,? Pollack said. “The overwhelming majority of people who have those protections will lose them overnight.?