The second, third and fourth parts of a major Senate association health plan bill, S. 1955, could change conventional state health insurance oversight far more than many AHP supporters realize, an opponent says.
Jerry Flanagan, a spokesman for the Foundation for Taxpayer and Consumer Rights, Santa Monica, Calif., says he believes the non-AHP parts of S. 1955 could lead to dramatic new limits on states’ ability to regulate small group health insurance rates and set minimum requirements for any insured health insurance policies.
Health insurers and health insurance broker groups have lobbied for years for a reduction in benefits mandates, arguing that the free market is the best mechanism for setting plan standards.
But Flanagan says some single-state health insurers seem to believe big, national carriers could use the non-AHP parts of S. 1955 to squeeze them out.
The third and fourth parts of S. 1955 would eliminate so many popular state patient protection requirements that they could end up alienating rank-and-file members of the business groups that have been supporting the bill, Flanagan says.
AHPs would give small businesses the ability to buy health insurance through multi-state groups that would be able to enjoy much of the freedom from state benefits mandates that large self-insured employers now enjoy.
Health insurance and health insurance broker groups say an AHP system could destroy the health insurance market, by letting poorly capitalized, poorly regulated plans use rock-bottom prices to lure the healthiest groups away from traditional health insurers, and then, in many cases, failing.
Industry groups also have argued that any reform efforts should reduce the burden of state benefits mandates on all health insurers, not just AHPs.
The first part of S. 1955, introduced by Sen. Michael Enzi, R-Wyo., would get around objections to concerns about lack of state oversight by requiring an AHP to offer fully insured coverage and giving regulators in the AHP’s state of domicile oversight over the AHP.
Flanagan, who opposes AHPs, says he believes the other sections of the latest version of S. 1955, which deal with “Market Relief,” “Affordable Plans” and “Harmonization of Health Insurance Laws,” would alarm some members of Congress and business people who support the AHP concept.
The Market Relief section would set standard national standards for small group health insurance rates.
Many states now require health insurers to offer the same rates to all small groups within a given community or use on a few rating factors, such as location and industry.
The second part of the version of S. 1955 reported out of the Senate Health, Education, Labor and Pensions Committee in March would eliminate many of those restrictions, by permitting non-AHP small-group insurers to consider age, gender and participation in wellness programs when setting rates, according a copy of the 81-page amended bill posted on the Web site of Families USA, Washington.
A small group carrier could establish up to 9 separate classes of business, excluding AHP plans.
In 6 months, the secretary of Health and Human Services would have to come up with Model Small Group Rating Rules, in consultation with the National Association of Insurance Commissioners, Kansas City, Mo. Those rules would take effect immediately in some states and within 5 years in other states.
At least one analysis has suggested that the new rating system could let an insurer charge the least-favored customers 25% more than it charges the most-favored customers for comparable coverage, Flanagan says.