GOVERNMENT & MEDICINE

New drive to pass AHP legislation is under way

Association health plans would be subject to federal regulation, rather than state insurance laws.

By Joel B. Finkelstein, AMNews staff. March 21, 2005.

Washington -- Small business groups have relaunched an effort to push through association health plan legislation designed to allow them to band together to increase their negotiating power. But some experts continue to warn that AHPs would make the struggle with rising health benefit costs worse instead of better.

Bipartisan legislation that would allow association health plans to be regulated under federal rather than state laws has been introduced in Congress with a nod from President Bush.

The bills set rules by which established groups could follow federal rules, which often are more relaxed than state laws, to offer insurance products to their members across the country. The measures also would move the responsibility for overseeing the plans from state insurance commissioners to Dept. of Labor officials.

"It is common sense to believe it costs less to set up and administer a plan where you can spread the costs over a pool of hundreds of thousands of people, rather than a pool of five or 10 employees," Sen. Jim Talent (R, Mo.) said in a floor statement introducing an AHP bill he co-sponsors with Sen. Olympia Snowe (R, Maine). A companion bill has been introduced in the House.

That notion is supported by many small firms, according to the National Federation of Independent Business, a trade group for such companies.

"Just like buying a case of soda at a supermarket costs less per can than buying 24 individual cans at a vending machine, [association health plans] would allow groups like NFIB to buy thousands of health insurance policies at a lower per-policy cost and pass those savings along," the group says in a statement.

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