Pros, cons of association health plans debated

AHPs wouldn't cost much to regulate, but questions remain as to whether they would help or hurt small businesses.

By Joel B. Finkelstein, AMNews staff. May 9, 2005.

Washington -- Association health plan legislation is again moving through the House, and Senate proponents hope that this year it will pass in the upper chamber for the first time.

Legislation to allow AHPs to operate nationally recently was approved by the House Committee on Education and the Workforce, clearing the way for a full House vote. It also has recently been the subject of Senate hearings.

"AHPs are crucial to solving the small business health care crisis because they represent a fair, fiscally sound and tested approach," Sen. Olympia Snowe (R, Maine) said at a recent hearing of the Senate Small Business and Entrepreneurship Committee, which she chairs.

The House and Senate bills are almost identical to legislation passed by the House last year. The measures would allow association health plans to maintain uniform operations across the country, avoiding many state requirements, such as benefit mandates and community rating.

Not bound by such state requirements, AHPs would be able to offer lower premiums to many small businesses, according to a recent Congressional Budget Office analysis of the legislation. The plans would be regulated by rules set by the federal government and the state in which they are headquartered. The U.S. Dept. of Labor would be responsible for overseeing the new entities.

Snowe, who introduced the Senate bill, said she hoped that Congress would be able to pass legislation this year that will help small businesses and the uninsured afford health coverage. AHP legislation could do that at nominal cost, she said.