Some members of the American Academy of Actuaries say S. 1955 should keep health carriers solvent but might not do much to lower overall small business health coverage prices.
The small business health plan bill, introduced by Sen. Michael Enzi, R-Wyo., would cut rates for some small groups but raise rates for others, and the care discounts that the SBHPs negotiate might not be much better than the discounts insurers already negotiate for small group plans, Karen Bender, chairperson of the AAA’s small-group market task force, and David Bahn, a member of the task force, write in a letter sent on behalf of the task force.
The authors addressed the letter to Senate Majority Leader William Frist, R-Tenn., and Senate Minority Leader Harry Reid, D-Nev.
Enzi is best known for promoting “association health plans,” or plans that would give small businesses the ability to team up to join the same kind of self-insured, multistate plans that now insure many employees at larger employers.
The AHP plans would be exempt from state insurance regulation.
The authors of the letter sent by the AAA, Washington, note that the SBHP proposal is different because SBHPs would have to buy insured health coverage from an insurer that would be supervised by regulators in the insurer’s state of domicile.
But S. 1955 also would create a federal regulatory system for the small-group health insurance market, and how that federal regulatory authority would apply to the individual health insurance market and to small-group markets in states that refuse to accept federal oversight is unclear, the actuaries write.
The current SBHP bill appears to resolve past AAA concerns about whether an AHP program might create an unlevel playing field for health insurers or create a large number of shaky, poorly supervised AHPs, Bender and Bahn write.
But “insurers currently pass on to small-employer groups the results of their buying powers in provider negotiations,” the authors write. “It is unlikely that the introduction of SBHPs would materially change these discounts.”
One S. 1955 provision would let insurers offer a “basic plan” that would offer a package of benefits shaped by market forces.
AAA task force members disagree about whether the government should try to create a minimum benefits package, Bender and Bahn write.
Few employers in states that allow insurers to sell bare-bones packages buy the bare-bones packages, but some actuaries contend that “it was the lack of coverage of certain benefits that drove states to mandate benefits to begin with, implying that removing the mandates would cause insurers to drop those benefits,” Bender and Bahn write.
In addition, “some states may want to establish a safety net for those who would be disadvantaged by S. 1955,” Bender and Bahn write.
A copy of the AAA task force letter is on the Web at Document Link