Association Health Plans offer false promises

There is no doubt that the skyrocketing cost of health insurance is one of the biggest concerns for New Hampshire small-business owners. Ever-increasing premiums are forcing many of us to make difficult decisions, like whether to cut health benefits for our employees.

That said, one of the solutions being proposed in Washington to remedy this crisis would do more harm than good. In particular, the U.S. Senate is now considering legislation to set up a special kind of federal insurer called an “associated health plan” (AHP) that would allow small companies to band together across state lines to purchase inexpensive health insurance.

While this idea sounds great on the surface, unfortunately, like many things that seem too good to be true, it is. This legislation will hurt, not help, because it would allow AHPs to circumvent important consumer health care protections in state law.

The bill is called The Small Business Health Fairness Act, but it is opposed by more than 1,000 organizations, including the National Small Business Association, the National Partnership for Women and Families and Consumers Union. These organizations object to this legislation because it is unfair, creating loopholes for AHPs that would harm the most vulnerable and sickest people and make it harder for most sick people to find affordable health coverage.

Federal AHPs appear to be so affordable because they eliminate many of the health benefits we have come to expect.

As a small-business owner, I rely on state health regulators to make sure that health plans provide a basic level of benefits and quality of care so that my employees get the health care they need.

Employees covered by these new federal AHPs would not be guaranteed coverage for many routine medical procedures.

The nonpartisan Congressional Budget Office has predicted that AHPs will “cherry-pick” healthier individuals into less expensive plans, while charging businesses with less healthy workers much higher premiums than what state law permits. In essence, federal AHPs would create two insurance pools; one for the healthy and the other for the sick.

To justify sidestepping hundreds of laws and regulations designed to protect those of us who purchase health insurance, proponents of AHPs claim the plans will help reduce the number of uninsured people. Unfortunately, there is simply no proof that this will happen.

Indeed, a recent California Healthcare Foundation study showed that federal AHPs will have no impact on the uninsured, and will cause major disruptions in the health-care market.

In addition, a study by Mercer Consulting found that health insurance premiums would increase by 23 percent for small employers who maintain their state-regulated coverage. As premiums increase for these small businesses, the Mercer study predicts that the number of uninsured Americans will increase by 1 million, as employees in small firms and their families lose coverage.

Many in Washington are saying that AHPs are better than nothing, and there is no harm in trying. However, history shows that increasing opportunity for insurance fraud has real victims. A recent General Accounting Office report found that the fraudulent plans, including federal “MEWAs,” which are very similar to federal AHPs, have left nearly 200,000 people with more than $250 million in unpaid medical claims from 2000 to 2002.

U.S. Sens. Judd Gregg and John E. Sununu must understand that exempting association health plans from state regulations is a prescription for higher health care costs and more uninsured Americans. New Hampshire’s small-business owners need real solutions for this problem, but not false promises.

Mark S. Deion is president/owner of Deion Associates & Strategies Inc., Warwick R.I., and serves on the board of trustees of the National Small Business Association and the Governmental Affairs Committee of the Smaller Business Association of New England. He can be contacted at marks@deionassociates.com .