NU Online News Service, Jan. 30, 2004, 5:32 p.m. EST – Enacting an association health plan bill could hurt existing health insurers.[@@]

Analysts in the New York office of Fitch Ratings give that assessment in a commentary on H.R. 660, a major AHP bill. The House passed the bill in June 2003. The Senate still is considering the bill.

President Bush gave the bill a boost during his State of the Union address by referring to allowing AHPs as a reform that might help reduce small employers’ health coverage costs.

H.R. 660 would give small employers the ability to join multistate health coverage purchasing groups that would be exempt from state regulation. The Employee Retirement Income Security Act of 1974 already exempts employers with more than 50 employees from some state health insurance regulation.

Bush and other H.R. 660 supporters say an AHP bill would lower health coverage costs for small employers by giving small employers the same freedom from state-mandated red tape that bigger employers now enjoy.

Existing unfairness in the health regulatory environment does contribute to higher costs and reduced insurance access, the Fitch analysts concede. But the Fitch analysts argue that the best approach would be to reform state insurance regulations, not to create a vehicle that small businesses could use to circumvent state regulation.

H.R. 660 would make the U.S. Department of Labor responsible for monitoring AHPs.

“Federally certified AHPs would be exempt from certain state insurance regulations, rating restrictions and stricter solvency requirements, making it more difficult for the DOL to adequately regulate an AHP,” Fitch analysts argue.

Moreover, because H.R. 660 would prohibit health insurers from forming or becoming AHPs, AHPs probably would team up with existing health insurers or benefits administrators, Fitch analysts predict.

The partnerships could help big health insurers at the expense of smaller insurers, the analysts conclude.

More information about H.R. 660 is on the Web at http://edworkforce.house.gov/issues/108th/workforce/healthcare/healthcare.htm