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Insurance regulators and insurance industry organizations want Congress to help small health insurance groups by giving tax breaks to health savings accounts, not by encouraging the formation of national association health plans.

Congress has been considering an HSA bill, H.R. 2351, and a national AHP bill, S. 545.

Supporters of the HSA bill, which was introduced by Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee, say it would help small groups and other insurance buyers by creating accounts that would combine the best features of medical savings accounts, flexible spending accounts and health reimbursement arrangements.

The AHP bill, introduced by Sen. Olympia Snowe, R-Maine, would let small employers join plans organized by national associations. The association plans would be exempt from state health insurance mandates, just as self-funded plans are today.

Supporters for the AHP bill include many business groups, including the National Federation of Independent Business, Nashville, Tenn.

At press time, both the HSA bill and the national AHP bill were still in play.

Regulators at the National Association of Insurance Commissioners, Kansas City, Mo., and legislators at the Albany, N.Y.-based National Conference of Insurance Legislators have criticized the AHP proposal.

National AHPs could “cherry-pick” healthier groups, ignore solvency requirements and escape the authority of time-tested consumer-protection laws, NAIC President Mike Pickens argues in a letter to Congress.

An NCOIL resolution urges Congress to reject any legislation exempting AHPs and multi-employer welfare arrangements from state insurance standards and state regulatory oversight.

Federal preemption would weaken state efforts to protect consumers, allow “cherry-picking,” and undermine state insurance reforms that have improved health insurance access and affordability for small employers, NCOIL contends.

The American Academy of Actuaries, Washington, expressed similar concerns in April.

The Academy warned Congress that differences between state and federal rules would lead to cherry-picking by national AHPs and that national AHPs could have problems with solvency.

The Health Insurance Association of America, Washington, is supporting the HSA bill but opposing the AHP bill with language that echoes the NAIC, NCOIL and actuarial academy arguments.

The concern is that AHPs would cause “further segmentation of the market,” HIAA spokesman Larry Akey says.

Because AHPs would offer leaner benefits packages, the AHPs would probably attract the younger, healthier groups, leaving the sicker groups in the traditional small group market, Akey says.

There is the potential for an “unlevel playing field,” agrees Janet Trautwein, vice president-government affairs at the National Association of Health Underwriters, Arlington, Va.

The design of many AHPs is not good for sick people, Trautwein says.

HSA-based systems are better because they help hold down costs by giving incentives to save money along with information about what care really costs, Trautwein says.

NAHU would like to see states strengthen the individual and small group markets by setting up and improving special pools of health insurance for residents with serious health problems.

Well-designed risk pools provide coverage for people who are hard to insure but avoid anti-selection problems, Trautwein says.

Meanwhile, at the state level, the big news in small group reform is that high-level state officials are spending most of their time worrying about budget crises.

Getting the attention of governors and legislatures is more of a challenge these days, Trautwein says.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 30, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.