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5 Peeks at the Senate's Small-Group Health Proposal

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Business groups and their supporters have been trying to get interstate association health plan bills signed into law for decades.

Senate Republican leaders are now trying to put their weight behind the idea. They put an interstate association health plan proposal in the new Affordable Care Act change proposal, the Better Care Reconciliation Act of 2017 draft.

(Related: Senate Republicans Unveil Health Care Plan)

Section 139 of the draft, which is available here, would create a Small Business Health Plans program.

Here’s a look at five things insurance agents and other financial professionals might want to know about the program proposal.

1. Association health plan programs create what amount to health insurance buying clubs for small businesses.

Many states already let small businesses join together to form one-state association health plans.

Those programs offer small businesses a chance to team up to get more attention from benefits brokers, and to bargain for better prices from health insurers, managed care companies and benefit plan administrators.

Federal interstate association health plan proposals would give small employers a chance to join multi-state, or national, health coverage purchasing groups.

For employers in states with insurance rules or business conditions that push up small-group premiums, joining an interstate association health plan program based in another state could be a way to take advantage of the lower premiums available in the other state.

Traditionally, the U.S. Chamber of Commerce and some agent and broker groups have been strong supporters of interstate association health plan proposals.

Many state insurance regulators, many consumer and patient advocacy groups, some benefits brokers and many insurers have opposed the proposals. One argument against the proposals is that multi-state association health plans regulated by just one state would all rush to set up their headquarters in states with weak regulation.

Another argument against the proposals is that the employers with the youngest, healthiest employers will probably leave the programs, and that antiselection will eventually kill the programs.

2. The House passed an association health plan bill a few weeks ago.

House members voted 236-175 to pass H.R. 1101, the Small Business Health Fairness Act, 236-175, on March 22.

(Photo: Mike Scarcella/NLJ)

(Photo: Mike Scarcella/NLJ)

All 232 Republicans who voted favored the bill, and 4 of the 175 Democrats who voted also favored it.

H.R. 1101 would call the interstate plans “association health plans,” and it would set many specific requirements for association health plans, such as minimum reserve requirements.

Official information about H.R. 1101 is available here.

3. Section 139 in the Better Care draft is shorter.

Senate Republicans tried to design the Better Care draft to comply with Senate rules that give special treatment for budget bills. Bills that can use the budget process can get through the Senate with just 51 votes, rather than 60.

Perhaps as a result, Section 139 is similar to H.R. 1101 in some ways, but it gives fewer details about how an interstate association plan might work than H.R. 1101 does.

Section 139 does not explicitly use the term “association health plan.” It does require that any plan using the provision should be an entity “established for a purpose other than providing health benefits to its members, such as an organization established as a bona fide trade association.”

4. Section 139 would give the Labor secretary a great deal of say over the design of the interstate association health plans.

The Labor secretary would regulate Better Care small business health plans by collecting a $5,000 filing fee for each plan and administering a certification process.

A plan would have to choose a state of domicile. To get certified, a plan would have to show that it met its state-of-domicile bonding requirements. A plan would also have to send DOL identifying information, copies of plan documents, and copies of agreements with service providers.

The Labor secretary could conduct regular reviews of the certified plan sponsors.

The Labor secretary would also have the authority to decide which state would be recognized as the association plan’s domicile state.

5. Anything could happen to Section 139.

There is no guarantee that the Better Care draft, or any similar legislation will get through the Senate, or that the association health plan provision will stay in the legislation.

Lawmakers in the House or Senate could still change the provision.

If, however, the provision does get deleted, or the entire legislative package fails, supporters could still try to get it through Congress through some other process.

— Read House Passes Antitrust and Association Plan Bills on ThinkAdvisor.