Release Date: 3/29/2005
A House committee approved legislation to exempt health plans offered by national trade associations from state coverage mandates.
Most business groups strongly support association health plans, saying they would enable small businesses to save money on insurance by pooling their purchasing power.
The House has passed the AHP bill before, so committee approval was no surprise. The legislation, however, did hit a bump this time around: an amendment preventing the plans from charging premiums based on the health of a company's employees or the type of business in which the company is engaged.
Rep. Charles Norwood, R-Ga., sponsored the amendment, which nearly passed but failed on a 24-24 tie vote. Norwood fears AHPs would "cherry pick" businesses with healthy employees by charging high premiums to businesses with less-healthy workers.
Under the legislation, AHPs can't vary their premiums based on an employer's health claims experience unless state laws allow them to. Insurers are allowed to do so in 33 states.
Supporters of AHPs say they would be put at a competitive disadvantage if they had to provide the same rate to everybody while other insurers could vary their rates. This would lead to insurers cherry picking healthy employers out of AHP plans, they argued.
"All we're trying to do here is put AHPs on the same level playing field in the marketplace," says Rep. John Boehner, R-Ohio, chairman of the House Education and Workforce Committee.
AHP supporters say Norwood's amendment would have gutted the bill. House approval is expected in April. Prospects in the Senate have improved now that Majority Leader Bill Frist has endorsed the legislation.