Healthcare2

ISSUE BRIEF Association Health Plans

Issue:

Over 45 million American workers cannot afford health insurance and are not offered health benefits by their employers. Many employers want to provide basic health benefits to their employees but cannot afford the double-digit increases in health insurance premiums. Some ARA members report increases of as much as 40 percent annually over the last several years. State regulation of health insurance plans creates enormous regulatory barriers for organizations that want to help their member companies provide health benefits to their employees.

Background:

Many small businesses that want to purchase health insurance for their employees cannot afford the rates available to them. In some states, insurance for small firms is only available through state-operated risk pools or from a single carrier. Moreover, even when coverage is available, small firms are usually unable to negotiate favorable rates because their businesses do not represent a significant portion of the insurer’s portfolio. Finally, state mandates increase the cost of basic insurance. Federal law preempting state regulations allows large firms and unions to provide affordable health care to their employees and members. Small business needs similar regulatory relief.

A federal structure is needed so that small businesses can band together through their trade, industry, or professional associations to purchase affordable health coverage. The integrity of these programs is established by: 1) Limiting the program to bona fide trade associations that are established and providing a range of services to their members; 2) Establishing sound financial standards and safeguards that require these plans to offer coverage to all members of the association and; 3) Limiting the plan’s ability to establish discriminatory rate policies based on claims history.

Health coverage for small businesses is addressed in S. 1955, the Health Insurance Marketplace Modernization and Affordability Act of 2005, introduced by Health, Education, Labor and Pensions Committee Chairman Mike Enzi (R-WY). We support passage of S. 1955 because we believe it offers a balanced approach that will reduce health care costs for all rental businesses nationwide.

The House has passed H.R. 525, The Small Business Health Fairness Act of 2005. The Senate needs to act on this critical issue. Small businesses can no longer be held hostage by an insurance market that is badly flawed. Passage of S. 1955 will provide an opportunity for a House/Senate conference committee to craft a final bill that provides a fair health insurance market for small businesses

Action Requested:

ARA strongly supports passage of S. 1955.