May 10, 2006
AHP Legislation May Soon Be A Reality
Congress, after eight unsuccessful attempts, may finally pass scaled down Association Health Plan (“AHP”) legislation with a majority vote of the Senate this spring.
In November of 2005, Sen. Michael Enzi, R-Wyo., introduced a bill (S. 1955) titled “Health Insurance Marketplace Modernization and Affordability Act of 2005” (HIMMAA). This bill would allow a bona fide trade association, industry association, professional association or chamber of commerce in existence for at least three years, for purposes other than providing insurance, to sponsor fully insured “small business health plans” (SBHP). This legislation would in effect allow small employers to band together to purchase health insurance in the hopes of making health care more affordable for small employers.
HIMMAA is a compromise between previous AHP proponents and opponents. HIMMAA addresses the concerns of vocal opponents of previously drafted AHP legislation by preventing groups from forming around employer groups with lower health risks (i.e, ‘cherry picking’ low risk), by ensuring that SBHPs are subject to state oversight and by allowing only the formation of fully insured SBHPs.
The proposed HIMMAA would create federal rating rules, similar to the Model Small Employer Health Insurance Availability Model Act of 1993 adopted by the National Association of Insurance Commissioners (NAIC) and allows insurance carriers to offer health insurance free of state mandated benefits. Insurer would be allowed to offer minimum coverage or ‘bare-bone’ coverage if such insurer also offers high-end coverage, which provides benefits equal to the coverage provided to state employees in one of the five largest states (California, Florida, Illinois, New York and Texas).
A Mercer Report examined HIMMAA at the request of the National Small Business Association and concluded that HIMMAA as proposed would decrease health insurance premiums by 12% for small employers and decrease the percentage of uninsured in the small employer market by 8%.
Although AHP legislation has less than favorable history, limiting AHPs to fully insured plans and providing the other protections discussed above along with newfound support by previous opponents of AHP legislation, such as the National Small Business Association and the NAIC, increases the odds that this new compromise AHP bill may actually become law.
HitesmanLaw, P.A. represents numerous trade associations and has assisted such associations with establishing Association Health Plans. If you have any questions or would like assistance in establishing an Association Health Plan please feel free to call our office at (816) 875-1919.
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