On Tuesday, July 26, the U.S. House of Representatives passed The Small Business Health Fairness Act (H.R. 525), legislation that would allow for the creation of Association Health Plans (AHPs). AHPs would enable small businesses to band together across state lines through bona fide trade and professional associations to purchase affordable health packages for themselves and their employees. The bill passed overwhelmingly by a vote of 263 - 165.
President Bush applauded the House vote and urged the Senate to follow the House's lead. However, opponents of the bill, such the Blue Cross and Blue Shield Association, argue that bill will not help small businesses and their workers and are calling on the Senate to reject similar legislation (S. 406) that was introduced in late February by Senator Olympia Snowe (R-ME). A vote on S. 406 is expected sometime in the fall.
Rep. Sam Johnson (R-TX), the sponsor of the House bill, said he believes the legislation will increase the number of working Americans with health insurance. "Due to the significant number of service and retail jobs in the Lone Star State, 27 percent of working Texans don't have health insurance," he said in press statement. "[AHPs] would change that. It's time to increase the insured and give small business the same access to affordable health care that big business already enjoys. As I like to say, "If it's good enough for Wall Street, it's good enough for Main Street.'"
While the creation of national AHPs by professional or trade associations isn't prohibited by law, it is currently so cost- and administrative-prohibitive as to make it nearly impossible for associations to offer them to their members, Jessie Brairton, a lobbyist for the National Federation of Independent Business (NFIB), told BTW in February, when Johnson first introduced his bill. One of the key reasons is that health care is regulated at the state level, meaning an association trying to create an AHP would have to deal with many different rules regarding health care coverage, she explained.
Under the Employee Retirement Income Security Act of 1974 (ERISA), large corporate and union groups have no such problems purchasing health insurance at discount rates. ERISA preempts state regulations when dealing with corporate and union organizations, giving them greater flexibility and consistency across state lines and allowing them to prosper, according to the AHPsNow Web site. However, ERISA does not currently preempt state regulations for AHPs, which means AHPs must follow the varied regulations from state to state. "As state regulations have tightened over the past decade, they have made running an AHP across state lines an administrative nightmare," AHPsNow noted.
As it currently stands, small businesses have little buying power and few affordable options when it comes to health coverage. According to NFIB, five or fewer insurers control at least three-quarters of the small group market in most states. NFIB contends that this lack of competition is contributing to double-digit rate increases for many small businesses and is resulting in a rise in the number of small business employees who are uninsured.
According to Johnson, H.R. 525 would provide millions of small-business owners, their employees, and their families access to more affordable, quality health insurance through the creation of AHPs. The group purchasing power would lower costs and protect employers from the high-priced small-group market and cost-driving state-mandates. A private study estimates if AHPs became law, 8.5 million Americans would have health insurance.
However, Mary Nell Lehnhard, senior vice president of the Blue Cross and Blue Shield Association, said, "Today's passage by the House of Representatives of H.R. 525 ... would be devastating to small businesses and their workers who are in desperate need of quality, affordable health coverage," and she called on the Senate to "pursue thoughtful and practical policies that improve access to affordable healthcare for small employers and their workers."
At least 170 national associations representing 12 million employers and 80 million employees support legislation that would make it easier for the creation of national AHPs, including ABA, the Associated Builders and Contractors, the American Society of Association Executives (ASAE), the National Black Chamber of Commerce, the National Association of Women Business Owners, and NFIB. --David Grogan