In August 2005, the U.S. Census Bureau reported that approximately 46 million Americans were without health insurance. This number has been rising steadily over the past few years and employees of small businesses are affected the most.
One solution that surfaced in 2003 was the creation of Association Health Plans (AHPs). AHPs are group health plans sponsored by trade, industry, professional, chamber of commerce, or similar business associations.
In February 2003, H.R. 660, the Small Business Health Fairness Act of 2003, was introduced in the House. The bill allowed small firms to pool together in associations across state lines to offer health insurance, exempt from most state insurance mandates. It passed by a vote of 262-162 in the House in June 2003. It was referred to the Senate Committee on Health, Education, Labor, and Pensions. Since that time, the bill has seen no action.
AHPs have been widely criticized by a number of organizations including the American Cancer Society, the American Academy of Pediatrics, the American Diabetes Association and Blue Cross Blue Shield Association, to name a few.
•While often touted as a way to expand access to coverage, all of the evidence suggests that AHPs would not be effective at reducing the number of Americans without health insurance coverage … they would expand the number of Americans without health insurance.
• AHPs as proposed under the legislation could “cherry pick” healthier individuals and discourage sicker people, including cancer patients and survivors, from participating due to unaffordable premiums.
• AHPs’ exemption from state laws will allow them unfettered ability to increase premiums for small businesses as much and as often as they want when an employee gets sick.
• All of the resources and tools state officials take to prevent and detect fraud would be eliminated for AHPs, placing consumers at great risk.
• AHPs would be allowed to skirt state laws requiring insurance providers to cover quality cancer prevention, early detection and care. These health plans would be exempt from state consumer protections such as mammography or colon cancer screening, allowing the AHPs to operate under lower benefit standards.
Joseph E. Rossmann, vice president of fringe benefits for Associated Builders and Contractors Inc. (ABC), addressed these concerns with information taken directly from the AHP legislation.
“A study was conducted by the Congressional Budget Office [CBO] regarding AHPs. Opponents of the plan have taken the numbers from the study out of context to make flawed assumptions,” said Rossmann.
According to Rossman:
• CBO estimates that once the effects of the legislation have been fully integrated into the marketplace, approximately 600,000 formerly uninsured people (including employees and their dependents) would have health coverage. Approximately 7.5 million people would obtain health insurance through association health plans.
• The language clearly states that the bona fide association must provide all interested employers (regardless of age, health status, etc.) with information regarding all coverage options available under the plan. Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), an individual or employer cannot deny coverage based on health status or claims experience. AHPs would be subject to all the preexisting condition, portability, nondiscrimination, special enrollment and renewability provisions under HIPAA. Thus, it will not be possible for AHPs to “cherry pick” because sick or high-risk groups or individuals cannot be denied coverage.
• The bill requires that the contribution rates for any particular employer must be nondiscriminatory.
This means that contribution rates for employers cannot vary on the basis of any health status-related factor with respect to employees of particular employers or on the type of business or industry in which the employer is engaged — unless the state where that small employer is located would specifically allow such a variation, and then, only to the extent that the state would allow.
• The solvency standards, plan requirements, oversight, and patient protections included in the AHP legislation are more stringent than those now required by some states.
• Because it operates in the interest of its members, AHPs will readily cover benefits demonstrated to be cost-effective, such as childhood immunization, prenatal care, and cancer screenings.
In 2005, a new player joined the game of establishing affordable health care for small businesses. U.S. Senator Michael Enzi of Wyoming has been working to increase coverage in his own state and has expanded his effort with a national plan.
Enzi is chairman of the Senate Health Committee and helped push through the “High Risk Pool Funding Extension Act of 2005,” H.R. 4519. Enzi’s committee and the senate passed the bill last year.
The house passed it on Feb. 2, 2006, and it has been sent to the president for his signature. The bill would provide seed money and operational funding to support state-based programs to maintain health insurance pools for high-risk individuals who, because of their health problems, cannot find coverage in the private insurance market.
Prior to H.R. 4519, Enzi designed “The Health Insurance Marketplace Modernization and Affordability Act of 2005” to lower health insurance costs by stimulating market reforms and promoting competition while allowing trade associations the ability to offer group insurance plans for employees.
Enzi’s bill, S. 1955, would allow businesses and trade associations to band their members together and offer group health coverage on a national or statewide basis. The group plans, according to Enzi, would be in direct response to runaway costs that are driving many employers and families from comprehensive health insurance. Since 2000, group premiums for family coverage have grown nearly 60 percent.
“We are nearing almost five years of double-digit growth in health insurance premiums — increases that have repeatedly exceeded more than five times the rate of inflation,” said Enzi, a former small business owner. “This inflationary spiral is lowering the quality of life for countless families and hurting our economy. But those hardest hit are America’s small businesses and their hard working employees and families. Never before has there been a more urgent need to encourage market reforms like those proposed in this bill.”
The bill is designed to enhance the market leverage of small groups as well as individuals by giving associations a meaningful role on a level playing field with other group health plans; streamlining the current hodgepodge of varying state regulations; preserving the primary role of the states in health insurance oversight and consumer protection; making lower-cost health plan options available; and achieving meaningful reform without a big price tag, Enzi said.
“Enzi has taken the major components of AHP S.406 and integrated them into S.1955. He’s also working with concerned health organizations to implement their suggestions into a plan that will work for everyone,” said Rossmann. “ABC fully supports his proposal.”
“Our hope is that Enzi’s bill finally gets the ball rolling on health plans for small businesses,” said Rossmann. He expects that Senator Enzi will bring the bill before his committee in March, and that Senator Bill Frist (Tennessee) will bring S.1955 before the Senate in April.
For more information on Senator Enzi’s “Health Insurance Marketplace Modernization and Affordability Act” visit http://enzi.senate.gov. CEG