A Senate committee panel voted 11-9 Wednesday to approve an association health plan bill.
“It’s time for the Senate to pass this bill,” Sen. Michael Enzi, R-Wyo., the sponsor of the bill, said after the vote. “No more excuses.”
Before the vote, Enzi said enacting S. 1955, the Health Insurance Marketplace Modernization and Affordability Act, would help small businesses to afford group coverage by banding together through associations. Bill advocates say the association plans would enjoy the same freedom from state benefits mandates that large, self-insured employers now enjoy.
Sen. Christopher Dodd, D-Conn., “said insurance companies have to keep an eye on the bottom line, and that the reason we have so many insurance mandates is that insurance companies otherwise would have complete control over what is and isn’t covered,” Enzi said. “In other words, health insurance is a seller’s market, and the sellers control the product and dictate the terms. Having been in business before, I understand what Senator Dodd was saying.”
But opponents of S. 1955 said enacting it would interfere with states’ ability to regulate the insurance industry.
The bill “effectively preempts the judgment and decisions of the people of my state,” said Sen. Edward Kennedy, D-Mass., the most senior Democrat on the HELP Committee.
The bill would sharply limit states’ ability to protect consumers, Kennedy said.
The National Federation of Independent Business, Nashville, Tenn., and other employer groups have supported S. 1955, but many insurance groups, such as the Blue Cross and Shield Association, Chicago, and the National Association of Insurance and Financial Advisors, Falls Church, Va., have opposed the bill.
Enacting an AHP bill would force traditional insurers to compete with financially shaky, poorly supervised AHPs that would lure away employers with younger, healthier employees by offering unrealistically low rates, bill opponents argue.
Eventually, when the shakier AHPs shut down, traditional health insurers might have to bail out the employer groups left without coverage, the opponents warn.
Enacting an AHP bill also would reduce pressure on states to reduce the burden of mandates on all health plans, the opponents say.
A group of current and former officers of the National Conference of Insurance Legislators, Troy, N.Y., sent lawmakers a letter complaining about the possibility that AHPs might take the youngest, healthiest groups away from traditional health insurers.
“Adverse selection would trigger a fragmentation of the market, which, ultimately, could contribute to the nation’s growing underinsured and uninsured populations and place significant additional pressure on the ‘high risk pools’ currently available in the states,” Frank Wald of North Dakota, Craig Eiland of Texas and the other current and former NCOIL officers write in the letter.
“In its current form, the bill also allows insurance companies to sue states for injunctive and/or equitable relief, but ironically provides no such relief for consumers against insurers,” the current and former NCOIL officers write. “Without state officials to depend on for assistance or an opportunity to legally challenge insurers, consumers will be isolated in times of need.”