Report: Association Plans Could Harm Small Business

February 22, 2005

A new report titled, “Association Health Plans — A Step Backward for Small Employers and Consumers,” maintains that federal Association Health Plan legislation would have devastating consequences for small businesses and consumers.

The report summarizes AHP research conducted over the past five years, and includes 15 economic, policy and legal studies. The Senate and House of Representatives recently re-introduced legislation that would exempt AHPs from important state regulation.

The report was released at a Capitol Hill briefing by the American Diabetes Association, the Association of Health Insurance Advisors, the Blue Cross and Blue Shield Association, the Coalition Against Insurance Fraud, the National Association of Insurance and Financial Advisors, the National Partnership for Women & Families and the National Small Business Association.

These groups oppose federal AHPs because they believe they will increase costs and result in loss of state oversight of healthcare services.

Taken together, the conclusions reached by these 15 studies is that AHPs could:

— Increase premiums for the vast majority of small employers and their workers;

— Fail to address the needs of small businesses and workers;

— Lead to widespread plan insolvencies and fraud among these AHPs;

— Make it difficult or impossible for small businesses with older, sicker workers to have access to affordable health coverage; and

— Take away state-based consumer protections that millions of Americans rely on today, including the right to appeal when a health plan denies reimbursement for medical care.

“This compendium features study after study showing that AHP legislation would likely increase premiums for small employers and their workers, and make it much harder, if not impossible, for small business owners with older, sicker workers to get access to affordable health coverage,” said Todd McCracken, president, National Small Business Association. “We need a better solution for small businesses. This is not the answer.”

Some consumer groups also have concerns about AHP legislation. “AHPs are especially bad medicine for women, who are disproportionately likely to own, or work at, a small business, and to suffer when comprehensive health coverage is unavailable,” said Debra L. Ness, president of the National Partnership for Women & Families. “We need effective legislation that will ensure access to affordable and comprehensive coverage, help those most in need, provide strong consumer protections and offer meaningful solutions for covering the uninsured. We believe AHPs will do none of that.”

The compendium includes study abstracts from research conducted by the Georgetown Health Policy Institute, the Lewin Group, the American Academy of Actuaries, the California Healthcare Foundation, Mercer Consulting, and the Congressional Budget Office, among others.

“The facts are in,” said Mary Nell Lehnhard, senior vice president, Blue Cross and Blue Shield Association. “Research from diverse sources — government reports, academic analyses and studies from independent private research organizations — clearly shows that federal AHPs would likely make coverage less affordable, less accessible and less secure for small businesses and their employees.”

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