Association health plans get new push in Washington

When President Bush gives his State of the Union address on Tuesday, his agenda is expected to include help for small businesses hurt by rising health care costs.

Bush wants to create national association health plans. Known as AHPs, they would allow small businesses to buy into group health insurance plans anywhere in the country, enabling them to pay much less than they pay now when buying small policies directly from insurers.

Association health plans already exist -- trade associations and chambers of commerce are among the organizations that sponsor them -- but these plans are tailored to individual states. A major obstacle to a national AHP is the difference in requirements that states have for what health plans must cover.

For example, some states require routine mammograms to be covered, or for insurers to reimburse policyholders for birth control pills, while other states do not. Bush is expected to ask Congress to pass a federal law that would supersede these and other state regulations.

General support

Small-business advocacy groups generally support the idea.

"We see AHPs as a common-sense way to lower health care costs by encouraging competition and a free-market approach rather than a government or taxpayer funded solution," said Ed Frank, spokesman for the Washington-based National Federation of Independent Business.

Jamie Amaral, the NFIB's national director of health care, said small businesses could see their health insurance costs fall by double digits under AHPs because of lower administrative expenses.

At National Small Business United, also a Washington-Based advocacy group, president Todd McCracken wants to see companies' health costs decline, but he's also concerned that AHPs might end up hurting some firms and their employees by excluding coverage for medical conditions that are expensive to treat.

"You have some some very legitimate associations that want to provide better benefits to their members, but some unscrupulous ones want to design a health plan that isn't particularly good for people who are older and sicker," McCracken said.

That could be particularly problematic if other AHPs, feeling the need to compete, also exclude such patients, he said, explaining that "it doesn't take very many players who play these games to force everyone else to do the same."

Under that scenario, employers who want to be sure all their workers are cared for could ultimately end up paying more for insurance someplace else.

The Blue Cross Blue Shield Association, which represents independent, locally operated Blue Cross and Blue Shield insurance plans, raised similar concerns.

Mary Nell Lehnhard, a senior vice president at the association, noted that AHPs in, for example, Oklahoma, would not be subject to laws of other states designed to protect policyholiders. So if a small business in Massachusetts joined the Oklahoma plan and the plan was failing, the Massachusetts insurance commissioner could not step in to seize the plan's assets as it would do with a Massachusetts plan.

"We're also concerned about an older, sicker group" of workers that might have end up having to buy expensive insurance elsewhere, having been excluded from an AHP, she said.

But the NFIB, which is already lobbying for the creation of national AHPs, doesn't expect the law to leave such workers uncovered.

Frank said large labor unions and Fortune 500 and other big companies already have national insurance plans encompassing workers in many if not all of the states. He noted that these plans are set up to comply with rules under ERISA, the Employee Retirement Income Security Act of 1974, and said the NFIB was campaigning for AHPs to also operate under those regulations.

Advocates of national AHPs are feeling more optimistic with the Republican Party now controlling both houses of Congress. While the House has approved the creation of AHPs in the past, the legislation has died in the Senate.

'We're hopeful with the change in the Senate that it's going to happen," said Darrell McKigney, president of the Small Business Survival Committee, a Washington, D.C.-based advocacy group.

Frank said, "The momentum has really picked up as the cost of health care has risen so dramatically over the past few years."

On The Net

National Federation of Independent Business: www.nfib.org

Small Business Survival Committee: www.sbsc.org

Blue Cross Blue Shield: www.bcbs.com

National Small Business United: www.nsbu.org