Supporters, opponents debate association health plans

A proposed new way of bringing health insurance to employees has polarized businesses, organizations and government agencies across the nation and throughout New Hampshire.

Called association health plans, or AHPs, they’re designed to be offered by trade or professional organizations to members across state lines. Supporters believe AHPs will allow small businesses to band together for better bargaining power and lower health-care costs. Opponents see AHPs as an open door to fraud and a system under which the sickest workers will be left without coverage.

Under the federal Small Business Health Fairness Act – approved by the U.S. House earlier this session — an association would have to meet several requirements in order to offer medical benefits to its members. The association sponsoring the AHP must be a “bona fide” professional or trade organization in existence for at least three years for purposes other than obtaining or providing medical insurance. It must have its AHP certified by the U.S. Department of Labor. It must create a board of trustees and have solvency requirements approved by a qualified actuary. It must also file the certification in each state in which at least 25 percent of participants live in and contribute to the high-risk pool in each state in which it operates. Self-insured associations must have at least 1,000 participants and beneficiaries in order to form an AHP.

AHPs have received sizable support from public and private organizations as a viable health insurance option for small and medium-sized businesses that have been saddled with skyrocketing health premiums.

With AHPs, proponents say, premiums should drop by as much as 25 percent and as many as 8.5 million previously uninsured workers should be covered.

New Hampshire’s two House members voted in favor of establishing AHPs. Rep. Charlie Bass said in a prepared statement that he supported AHPs “because this bill helps resolve a nationwide problem that’s particularly acute in New Hampshire. This state’s small businesses have the second highest average health insurance costs in the country.”

Rep. Jeb Bradley told New Hampshire Business Review that he voted for the bill because “in all of the various conversations I’ve had with small-business owners, the cost and access of health care was one of their biggest issues. In the last 10 years, we’ve lost so many carriers in New Hampshire, we’ve got to do something to bring more access into the marketplace and provide greater buying power to small businesses.”

No state oversight

Tom Boucher, manager of CJ’s and TBones Restaurants and chair of the New Hampshire Restaurant and Lodging Association executive committee, said that businesses in the restaurant and lodging industry in general are behind AHPs “because most are very small employers and just can’t compete with larger companies to get affordable health care. I know I’ve experienced a 12 percent rise in costs every year for the last four years, and I’m lucky. Others have paid much more than that.”

But other organizations, such as the Business & Industry Association of New Hampshire, are split down the middle on the issue.

“Because our members have such strong views about AHPs on both sides, we could not take an official viewpoint,” said BIA President John Crosier.

Crosier voiced some concerns about the double impact of what he called the AHP “experiment” and New Hampshire’s Senate Bill 110 — which eliminated community rating in determining health insurance premiums for small businesses.

“People say, ‘Let’s let markets work,’ then they have a knee-jerk reaction to unintended consequences. It’s been that way with SB 110, and it looks that way with AHPs,” said Crosier.

Joan LaPlante, president of the New Hampshire chapter of the National Federation of Independent Businesses, also hinted that her members were not completely unified on the AHP issue either.

“In any organization, there are people who do not agree with the organization’s position. They are in the minority and have their own reasons,” she said, adding that “when the NFIB-NH membership was polled, our members strongly favored AHPs.” The national NFIB is leading the charge for AHPs.

Opponents in equally large and vocal numbers say AHPs will have too many unintended consequences. One of the most troublesome, they say, is that AHPs would be able to operate outside the jurisdiction of state insurance departments, undermining any local protections against fraud.

It is precisely this exemption that most concerns Leslie Ludtke, an attorney for the New Hampshire Insurance Department, who said her agency fears that “selfinsured AHPs will be exempt from state laws, particularly state consumer protection and rating laws.”

Jessie Howe Brairton, an NFIB lobbyist in Washington, said the federal laws that would control AHPs are at least as stringent as state laws, and many are more so.

“Both fully insured and self-insured AHPs fall under ERISA and HIPAA and would be overseen by the U.S. Department of Labor,” said Brairton, citing the two federal laws under whose oversight AHPs would be subject.

Fully insured AHPs would function similarly to most other group plans: An association would contract with a health insurance provider and would continue to follow many of the federal and state laws that govern traditional group health insurance plans.

Self-insured AHPs — plans through which the association assumes the financial risk of its covered members – would function more like private pension plans, and therefore out of the reach of individual state laws.

AHP opponents also have voiced concerned about the capabilities of the federal Labor Department to regulate AHPs.

While NFIB’s Brairton said the department currently oversees “some 300,000 plans directly under them and has done so effectively,” the Small Business Coalition for Equitable Health Insurance – a group opposing AHPs – says the agency would be able to review each health plan for adequacy once every 300 years and that the General Accounting Office has claimed it would take the department 90 years to review pension plans, let alone AHPs, for fraud.

But Congressman Bradley said he felt the Labor Department “had a pretty good track record. Over 130 million people are covered under ERISA, and 67 million have self-insured plans under the direct oversight of the DOL.