Association Health Plans
Background
In recent years, small business organizations have strongly
supported efforts to enact legislation to allow small employers
to band together and purchase health coverage through new,
Federally regulated “quasi-insurance” plans offered
by associations. Proponents have argued that Association Health
Plans (AHPs) need exemption from state regulation to lower
costs and improve access to health insurance and to level
the playing field between small and large employers, allowing
small employers to compete with larger employers that now
have the option of exempting themselves from state regulation
by self-insuring the health plans they offer. President Bush
has announced his support for AHPs, and bills have been introduced
in the 109th Congress to provide for them.
However, several aspects of proposed AHP legislation also
pose serious risks for consumers. For AAGP, a particular concern
is that AHPs would be exempt from state oversight and regulation,
which means that important state consumer protections would
be lost. Many states have enacted mandates designed to ensure
consumers will get the insurance coverage they paid for, including
requirements for mental health benefits.
AHPs also would be allowed to “cherry pick” health
risk, discriminating in offering coverage by industry, benefit
package design, geographical categories, and health status,
a problem that would drive up the cost of coverage for less
healthy individuals left behind in the state regulated market
and causing some employers to drop coverage altogether.
Finally, in place of very specific and stringent state regulation,
with state insurance commissioners often playing an active
role in protecting consumers from fraud and insolvencies,
AHP legislation would establish only nominal and inadequate
Federal standards and oversight.
AAGP Position
AAGP has joined a broad coalition of health care professional
and consumer organizations in opposing Federally regulated
Association Health Plans.
March 2005
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