July 2005                        return to newsletter contents page

Association Health Plans: Eighth Time the Charm?

Ten years ago in the 104th Congress, the first bill proposing to allow the formation and multi-state operation of Association Health Plans (AHPs) with preemption of state insurance laws, was introduced in the U.S. House of Representatives. Since then – most recently last year – the House has passed AHP legislation seven times and is at the threshold of doing so for the eighth. On March 16, the Committee on Education and the Workforce approved the NAW-supported AHP Bill (H.R. 525, the Small Business Health Fairness Act of 2005) and formally reported the measure on April 13.

The Senate’s record on AHPs really represents the “flip side of the coin.” In the 10 years that this issue has been around, the Senate committee of jurisdiction – now formally known as the “HELP” (for Health, Education Labor, and Pensions) Committee – has never voted on the issue and an AHP bill has never been considered by the full Senate. In fact, in that 10 year period during which the House has been so active, the HELP Committee has conducted a grand total of three hearings.

This year held promise for change in the Senate. The April 21 HELP Committee hearing on S. 406, also the Small Business Health Fairness Act of 2005, at which the Chairman, Sen. Mike Enzi (R-WY) presided, was the first the committee had conducted on AHP legislation since the late 1990s! That’s the good news. The bad news is that nearly two months later it is anything but clear where the AHP issue is headed in Congress’ upper chamber.

It is really remarkable how differently the AHP issue has been received in the two houses of Congress. In the House, AHPs have had committed backing from the Republican leadership, particularly Speaker Dennis Hastert (R-IL-14), Education and Workforce Committee Chairman John Boehner (R-OH-8) and Employer-Employee Relations Subcommittee Chairman Sam Johnson (R-TX-3), and virtually unanimous support from the House’s GOP members. The strong measure of support from House Democrats gives AHP legislation a welcome degree of bipartisanship.

In the Senate, AHP legislation has been allowed to languish. The Chairperson of the Small Business Committee, Senator Olympia Snowe (R-ME), the author of S. 406, along with Missouri Senators Jim Talent (R) and Kit Bond (R) have been pushing this issue hard with their colleagues for years. Unfortunately, the strength of support for AHPs among the Senate’s Republican leadership and the HELP Committee’s Republican members has been less than inspiring, and the only Senate Democrat courageous enough to sign-on as a cosponsor is Senator Robert Byrd (D-WV).

Nevertheless, AHP legislation may actually have the “juice” to cross the finish line this time. Noting the drop in Congress’ approval ratings in recent public opinion polls, the prestigious National Journal recently asked 77 Republican and Democratic “Washington Insiders” to identify the top factors contributing to Congress’ declining fortunes. More than half – 39 – responded “failure to address the everyday concerns of average Americans.” National Journal then asked, “What action by Congress would do the most to restore public confidence?” Just under half – 36 – responded “extend health insurance to more Americans.”

The twin problems of rising health insurance costs and the growing number of medically uninsured Americans – now in the neighborhood of 45 million – remain daunting with no single, “silver bullet” solution in sight. Wholesaler-distributors are caught up in this – in NAW’s annual Health Benefits in Wholesale-Distribution survey completed in March 2005, wholesaler-distributors reported an average increase in health insurance premiums of 13 percent, the fourth consecutive year of double-digit increases. Related data revealed that employers are less frequently paying 100 percent of the premium and that the share of premium paid by employees is on the rise.

Small employers in wholesale distribution continue to be the hardest hit in the existing health insurance marketplace and, more generally, the bulk of the uninsured problem is found among people with some employment connection to a small business. The AHP Bill is designed to deal with this problem. The Small Business Health Fairness Act will enable smaller employers to achieve economies of scale, administrative cost savings and bargaining power similar to that already enjoyed by large employers in operating their health plans, by allowing them to band together through their trade associations to purchase health coverage for their employees from a plan that operates across state lines. AHPs will bring smaller employers more health coverage choices, a more competitive market and lower costs; meaning more small employers will find it affordable to offer health insurance benefits as part of their business’ compensation package.

Large employers also have something to gain by the enactment of the AHP Bill. Today, health insurance premium payers, not the least of which are large employers, are burdened with higher premiums that result from “cost shifting”; i.e., when the cost of medical services are increased for those who can pay (most often due to employment-based health insurance coverage) to compensate for services provided to uninsured patients who can’t.

By bringing health insurance to more Americans, the AHP Bill is both good policy and good politics.

Wholesaler-distributors can help by contacting their Federal legislators in support of the Small Business Health Fairness Act of 2005. Ask you Representative to vote for H.R. 525 when it is considered by the House, and to vote against any weakening amendments.

Ask your Senators to cosponsor S. 406 and to press HELP Committee Chairman Enzi and Senate Majority Leader Bill Frist (R-TN) to make the Small Business Health Fairness Act a priority. It is time for the Senate to join the House of Representatives in bringing the AHP Bill to a successful conclusion.