On Wednesday, February 16, Senator Olympia Snowe (R-ME) introduced in the Senate "The Small Business Health Fairness Act of 2005" (S.406), which looks to "help small businesses access greater health insurance options and lower premiums" by allowing for the creation of Association Health Plans (AHP). The bill was co-sponsored by a bi-partisan group of 10 senators, including Senators Robert C. Byrd (D-WV) and John McCain (R-AZ). Following its introduction into the Senate, S. 406 was referred to the Committee on Health, Education, Labor, and Pensions.

"This legislation will provide revolutionary changes to the health insurance choices available for small businesses at no cost to taxpayers," said Snowe, who is chair of the Senate Committee on Small Business and Entrepreneurship, in a press statement. "It is a starting point and a crucial element of a solution to the health care crisis facing our nation's employed but uninsured."

Rep. Sam Johnson (R-TX) had introduced a similar bill (H.R. 525, The Small Business Health Fairness Act) into the U.S. House of Representatives earlier in the month. At present, Johnson's legislation has 97 co-sponsors.

The creation of AHPs is also supported by President Bush, who in recent speeches has advocated AHPs as a key element in his plan to tackle the country's increasing health care costs and the number of uninsured.

Under Snowe's bill, small businesses would be able to band together on a national level through trade associations and either purchase their health insurance from a provider or self-insure in the same way that large employers and unions currently do. The legislation also includes protections to "safeguard national AHPs from the current epidemic of fraud and abuse that is occurring through sham trade associations that take money from unsuspecting small businesses and then are either unable or unwilling to pay claims filed by subscribers."

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 early February. 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.

Moreover, 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 website [5]. 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.

At present, about 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 the NFIB and the American Society of Association Executives (ASAE).

"As a long-time ASAE member, ABA strongly supports ASAE's efforts in this area, and will continue to add our voice in support of this legislation," ABA COO Oren Teicher noted after Rep. John's bill was introduced into the House.

Currently, the main opponent to AHP legislation is Blue Cross and Blue Shield Association (BCBSA). Just last week, BCBSA said its top priority for 2005 was opposing AHPs.

For more information about AHPs, click here to go to NFIB's website [6].

For a previous BTW article on this topic, click here [7].