Members of the U.S. House have voted 263-165 to pass H.R 525, a bill that would create a system of multistate, federally regulated health plans.[@@]
All 227 Republicans who cast votes supported the bill, and the bill also attracted the support of 36 of the 200 Democrats who voted.
Trade and business groups already offer single-state association health plans. The single-state, state-regulated AHPs help small businesses team up to buy health coverage.
H.R. 525, the Small Business Health Fairness Act, would put multistate and national AHPs under the jurisdiction of the Employee Benefits Security Administration, an arm of the Labor Department. Multistate AHPs could either buy insured health coverage or self insure. Issuers of the coverage would not have to comply with state health insurance benefits mandates.
Rep. Sam Johnson, R-Texas, introduced H.R. 525.
Sen. Olympia Snowe has introduced a similar bill, S. 406, in the Senate.
President Bush has expressed support for the AHP concept in his State of the Union speech and almost all of his other speeches that have addressed the topic of health finance reform.
Organizations supporting the AHP bills include many small business groups, such as the U.S. Chamber of Commerce, Washington, and the National Federation of Independent Businesses, Nashville, Tenn.
AHP supporters say an AHP program would make health coverage more available and more affordable for small business owners.
Rep. Michael Fitzpatrick, R-Pa., pointed out in a speech supporting H.R. 525 on the House floor that administrative expenses typically account for at least 20% of the cost of a small health plan.
Congressional Budget Office estimates suggest that an AHP program could save small businesses an average of 13% on their health coverage, Fitzpatrick said, according to a written version of his remarks printed in the Congressional Record.
Fitzpatrick also cited a study that predicted that up to 8.5 million uninsured workers and dependents could gain coverage through an AHP program.
But many insurance industry groups oppose the AHP concept, arguing that federally regulated AHPs would have unfair advantages in underwriting over traditional, state-regulated health insurers.
Opponents include the Blue Cross and Blue Shield Association, Chicago; the National Association of Insurance Commissioners, Kansas City, Mo.; the National Conference of Insurance Legislators, Troy, N.Y.; and the American Academy of Actuaries, Washington.
During a press conference held to discuss a Georgetown University study on AHPs, Kansas Commissioner and NAIC Secretary-Treasurer Sandy Praeger said federal and state regulators need to collaborate to make sure that AHPs are legitimate and sound.
The NAIC has a longstanding position of opposing federal oversight of AHPs.
In May, NCOIL President Craig Eiland, a state representative from Texas, sent a letter to Congress discussing an NCOIL resolution opposing federal AHP oversight.
H.R. 525 would increase health coverage costs for small businesses by increasing the number of unauthorized and fraudulent insurers, Eiland predicted.
Mila Kofman, an assistant research professor at Georgetown University and an NAIC-funded consumer, published the AHP study that was on the agenda at the NAIC press conference.
Kofman writes in her analysis about 200,000 policyholders affected between 2000 and 2002 by fraud related to unauthorized AHPs and other “multiple employer welfare arrangements.”
The unauthorized AHPs have saddled workers and their providers with $252 million in unpaid medical bills, Kofman writes.
States shut down 41 illegal MEWAs and federal regulators shut down 3, Kofman writes.
Kofman notes in her report that the U.S. Labor Department lacks the legal authority necessary to shut down problem AHPs. To shut down an AHP, the Labor Department must file and win a case in federal court, Kofman writes.
Kofman also asserts that no specific legal provision would prohibit past operators of illegitimate AHPs or executives convicted of felonies from running AHPs.