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Strong opposition to deregulation of AHPs

Analysis says association health plans would help hundreds of thousands get health insurance, but would increase prices for millions.

By Joel B. Finkelstein, amednews staff. May 19, 2003.

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Washington -- Lawmakers are proceeding with legislation deregulating association health plans despite a chorus of voices warning that the move would do more harm than good.

The American Academy of Actuaries and 38 state attorneys general have joined the ranks of those opposing bills in the House and Senate that would amend the Employee Retirement Income Security Act to include AHPs among insurers that are exempt from state laws.

"While the goals of the legislation are laudable, the bills do not address the core problem, which is the high cost of health care," the academy states in a letter to one of the measure's sponsors, Rep. John A. Boehner (R, Ohio). Boehner chairs the House Committee on Education and the Workforce, which is scheduled to consider the bill this month.

Proponents of the measure, including small-business groups and the Bush administration, argue that removing the burden of state regulation would allow AHPs to operate like large companies that self-insure and are exempt from state regulation under ERISA. These companies are able to buy insurance at much lower rates than individuals and small businesses.

However, opponents say deregulated AHPs will benefit few small businesses, while fragmenting local insurance risk pools. If exempt from state laws, AHPs would be able to cherry-pick healthy employees, shifting an unfair burden onto insurers that currently provide coverage for individuals and small groups, according to a BlueCross BlueShield Assn. report.