Posted on April 9, 2003

Urgent alert: Association health plans approved by House committee


Kaiser Daily Health Policy Report
April 9, 2003
House Education and Workforce Subcommittee Approves Association Health Plan Bill

The House Education and Workforce Employer and Employee Subcommittee on April 8 voted 13-8 to approve a bill (HR 660) that would allow businesses in the same trade groups to form association health plans exempt from state laws that require health plans to provide certain benefits, according to CongressDaily Markup Reports. Under the legislation, the AHPs would not have to adhere to state laws that require health plans to provide certain benefits. Rep. John Boehner (R-Ohio), who sponsored the bill, said that exemption from state laws would help control costs. Subcommittee Chair Sam Johnson (R-Texas) added that the legislation would increase "small businesses' bargaining power with health providers" and predicted that the formation of AHPs would "increase the number of insured Americans by up to eight million individuals." However, most Democrats on the subcommittee said that the bill would "foster the creation of a group of cheap, inadequate plans immune to state requirements for benefits packages" and would prompt employers to switch to AHPs to reduce costs.

The full text of HR 660, the "Small Business Health Fairness Act of 2003":

Comment: Employer mandate (play or pay) proposals are receiving considerable attention as a possible means of expanding health care coverage to many of the uninsured. A concern expressed by employers, especially small businesses that frequently operate on narrow profit margins, is that health insurance is becoming less and less affordable. Association health plans (AHPs) would be exempt from state insurance requirements, allowing AHPs to offer plans with only minimal benefits, and with excessive cost sharing requirements that would be unaffordable for many.

The recent Kaiser Commission report on cost sharing demonstrated that even modest cost-sharing requirements significantly reduce the utilization of effective health care services. Most of the studies that demonstrate the importance of health care coverage in enabling access to care are based on coverage that is comprehensive has only relatively nominal cost-sharing by the patient, if any. There has been little study of the impact on access of the newest products that have stripped plans of many of their benefits and that have dramatically increased the cost-sharing requirements. And there is no information available on the degree to which access will be impaired under these even more Spartan AHP plans.

Most employers do care about their employees and do want them to have affordable health care coverage. But achieving affordability through AHPs is not sound policy since the products will not permit many employees to receive the care they need, simply because of inadequate coverage and lack of affordability of the cost sharing.

There is a much better way. Placing everyone in a single risk pool would ensure comprehensive coverage not only for employees but for everyone else as well. And funding that pool in an equitable manner would ensure that no individual or entity would be assessed an unfair or unaffordable amount. Small business owners would have the satisfaction of knowing that all of their employees and family members would always have access to affordable health care, and the owners would not be burdened with either excessive premiums or the guilt of knowing that the association health plan that they would have purchased is not much better than no coverage at all.

Our urgent task is first to fight for the defeat of HR 660, and then to move on immediately to the task of providing affordable, comprehensive coverage for everyone. Let Congress know... now!