Association Health Plan Legislation Reintroduced in the House

On Wednesday, February 2, Rep. Sam Johnson (R-TX) reintroduced in the U.S. House of Representatives "The Small Business Health Fairness Act" (H.R. 525), legislation that would allow for the creation of Association Health Plans (AHPs). AHPs would enable small businesses to band together across state lines through bona fide trade and professional associations to purchase affordable health packages for themselves and their employees.

Johnson's legislation passed the House last year, but a comparable Senate bill (S.545), introduced by Senator Olympia Snowe (R-ME) and Sen. Robert Byrd (D-WV), did not. Snowe is expected to reintroduce the legislation in the Senate in the next couple of weeks.

"It's high time Congress took some real action to make health insurance more affordable and more accessible. Association Health Plans would do just that," said Johnson in a press statement. Johnson chairs the Subcommittee on Employer-Employee Relations and serves on the Health Subcommittee on the Ways and Means Committee. Co-sponsors of the bill are Reps. John Boehner (R-Ohio), Nydia Velazquez (D-NY), and Albert Wynn (D-MD).

At present, about 170 national associations representing 12 million employers and 80 million employees support legislation that would make it easier for the creation of national AHPs, including the National Federation of Independent Business (NFIB) and the American Society of Association Executives (ASAE).

"As a long-time ASAE member, ABA strongly supports ASAE's efforts in this area, and we will continue to add our voice in support of this legislation," said ABA COO Oren Teicher.

"ASAE has long advocated allowing AHPs to operate under one set of governing regulations instead of complying with the many different state mandates that have historically discouraged AHP participation," Chris Vest, a spokesperson for ASAE, told BTW via e-mail. "ASAE believes the legislation introduced last year addresses the critical issues of access and affordability for the self-employed and employees of small businesses, which comprise over 50 percent of the 41 million Americans currently uninsured."

While the creation of national AHPs by professional or trade associations isn't prohibited by law, it is currently so cost- and administrative-prohibitive as to make it nearly impossible for associations to offer them to their members, according to Jessie Brairton, a lobbyist for NFIB. One of the key reasons is that health care is regulated at the state level, meaning an association trying to create an AHP would have to deal with many different rules regarding health care coverage, she explained.

Moreover, under the Employee Retirement Income Security Act of 1974 (ERISA), large corporate and union groups have no such problems purchasing health insurance at discount rates. ERISA preempts state regulations when dealing with corporate and union organizations, giving them greater flexibility and consistency across state lines and allowing them to prosper, according to the AHPsNow Web site. However, ERISA does not currently preempt state regulations for AHPs, which means AHPs must follow the varied regulations from state to state. "As state regulations have tightened over the past decade, they have made running an AHP across state lines an administrative nightmare," AHPsNow noted.

As it currently stands, small businesses have little buying power and few affordable options when it comes to health coverage. According to NFIB, five or fewer insurers control at least three-quarters of the small group market in most states. NFIB contends that this lack of competition is contributing to double-digit rate increases for many small businesses and is resulting in a rise in the number of small business employees who are uninsured.

Advocates of AHPs point out that with AHPs, small businesses could band together through trade and professional associations to purchase affordable health benefits. Furthermore, by joining together, small employers would enjoy greater bargaining power, economies of scale, and administrative efficiencies. The Congressional Budget Office has estimated that small businesses obtaining insurance through AHPs would enjoy premium reductions of 13 percent on average.

More to the point, AHPs would "level the playing field" between small businesses and huge corporations and unions, Brairton said. She noted that legislation allowing for AHPs has passed the House eight times, and probably will again, but has yet to pass the Senate.

This year, however, Brairton hopes that things might be different. For one, the reintroduction of Johnson's legislation comes exactly a week after President George W. Bush, speaking at the National Institutes of Health in Bethesda, Maryland, promoted his plan for reducing the country's increasing health care costs and the number of uninsured. The key elements in his plan are tax-free health savings accounts and AHPs.

Furthermore, with a new Congress comes renewed hope. "In the last Congress, the chairman of the Health Committee, Senator Judd Gregg (R-NH), was not supportive [of AHP legislation]," Brairton said. Now, there is a new Health Committee chair, Sen. Michael Enzi (R-WY), and many Senate freshmen are former House members who understand why legislation allowing for AHPs is important, noted Brairton.

Currently, the main opponent to AHP legislation is Blue Cross and Blue Shield Association (BCBSA). Just last week, BCBSA said its top priority for 2005 was opposing AHPs.

For more information about AHPs, click here to go to NFIB's Web site. --David Grogan