Bills offered in response to rising insurance costs

One measure seeks to free association health plans from state mandates, and the other would allow individuals to purchase health plans sold in other states.

By Joel B. Finkelstein, AMNews correspondent. Aug. 15, 2005.

Washington -- The House of Representatives recently acted on two pieces of legislation that have the potential to significantly change how health insurance is bought and sold in the small-group and individual markets.

With rising health care costs putting increasing pressure on lawmakers to pass some type of reform this year, the House before the August recess passed a measure that would allow association health plans to circumvent state regulation in favor of federal rules that currently apply only to self-funded health insurance plans generally offered by large employers.

And with election-year politics already setting in, the AHP legislation might have a better chance of passing in the Senate than it has had in years, experts said. The measure also is high on the White House's list of health care priorities.

The bill's supporters argue that by releasing AHPs from state mandate burdens, national associations could offer their members more affordable health insurance options. Under the measure, small businesses could band together, giving them negotiating power similar to that of large companies, said the bill's sponsor, Rep. Sam Johnson (R, Texas).

"It's time to increase the insured and give small business the same access to affordable health care that big business already enjoys," he said.

But the bill's opponents argue that, at best, federally regulated association health plans will segment the market. At worst, they say, it will further enable insurance scams that already fleece small businesses out of millions of dollars a year.