Self-Insurance Bill Opposed By Insurers

The National Association of Manufacturers, Washington, praised the legislation, which at press time did not yet have a number, as crucial to small businesses that want to provide health insurance.

The legislation would allow small businesses to take advantage of the same economies of scale, bargaining clout and administrative efficiencies enjoyed by large employers and unions, says Neil Trautwein, NAM’s health care lobbyist.

But Donald Young, president of the Health Insurance Association of America, Washington, says the legislation would create an “unlevel playing field,” creating one set of rules for employers who can join an AHP and a different set for those who can’t.

Moreover, he says, the proposal could lead to adverse selection.

“The preferential treatment of AHPs with respect to state mandated benefits and rating restrictions will almost certainly result in a migration of small employers, particularly healthier groups, out of the general small group market into AHPs,” Young says.

Premium rates will likely rise for the employers left behind, forcing them to drop coverage and destabilizing the entire small group market, he says. He adds that if enacted, the legislation would increase the risk of fraud in the marketplace and could create the need for an expensive new federal regulatory structure that duplicates the one already in place in the states.