A climactic vote on legislation that would create “association health plans” was nearing in the Senate at press time, with most congressional staffers and industry lobbyists expecting the bill to fail to garner the votes needed for passage.
The key vote will be on a manager’s amendment to the original bill as passed by the Senate Health, Education, Labor and Pensions Committee on March 15.
The bill is S. 1955 as modified and is called the Health Insurance Marketplace Modernization and Affordability Act. It has strong administration support, and a similar bill has passed the conservative-dominated House several times.
The Bush administration issued a statement expressing support for the bill, saying, “The administration applauds efforts to find ways to lower costs by reducing unnecessary administrative complexity and expense, as well as to allow the opportunity for a health insurance market available across state lines, and will continue to work with Congress in this area.”
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In general, the bill would allow small businesses and trade associations to form association health plans across state lines.
Under the bill, insurers would be permitted to sell plans that do not meet current state benefits requirements to businesses and individuals. However, they then also would have to offer a plan with benefits provided under a state employees’ plan in one of the five most heavily populated states–California, Florida, Illinois, New York and Texas.
In addition, the bill would pre-empt state laws that limit how much insurers can vary premiums from one small business to another.
The latest version is designed by the bill’s primary sponsor, Sen. Mike Enzi, R-Wyo., to move away from the National Association of Insurance Commissioners Model Act on health insurance and toward a 5/1 cap on all rating factors as a rating “floor.”
Under the modified bill, an adopting state now is defined as a state “that has enacted small group rating rules that meet the minimum standard of having a total variation limit on all rating factors that is not less than 5/1,” according to one analysis of the latest bill.
Within that 5/1 band is a smaller cap on certain factors of 3/1, according to one analysis of the latest bill.
There are four factors that fall under the 3/1 cap: age, duration of coverage, claims experience and health status.
Under the manager’s amendment, the bill would require health insurance issuers to use age and/or health status, and they may also use duration of coverage and/or claims experience.
There are 10 rating factors that fall under the overall 5/1 cap: age, duration of coverage, claims experience, health status, industry, geography, group size, participation rate, class of business and participation in wellness programs.
The manager’s amendment preserves a provision–known as the “high-low option” –that was approved in March by the Senate HELP Committee.
Under this language, insurers may offer basic plans in the small group market, individual market, large group market or through a small business health plan that does not meet the mandate requirements of the state if they also offer an “enhanced option” that includes either: (1) all the mandates in the state; or (2) the mandates covered by a state employee plan in one of the five most populous states.