Secretary of Labor Elaine L. Chao Testifies on Association Health Plans

Release Date: 4/20/2005

WASHINGTON-U.S. Secretary of Labor Elaine L. Chao today testified before the Senate Committee on Small Business and Entrepreneurship to convey the Administration's support for Association Health Plans (AHPs) legislation that would provide millions of small business owners and their employees access to quality, affordable health care.

"Small business employers want to provide quality affordable health care coverage for their workers but are stymied by prohibitive costs and regulatory burdens," said Secretary Chao. "That is why this administration strongly supports legislation that would increase access to health care for workers by making available to small business employers the benefits of Association Health Plans, which include greater bargaining power and administrative efficiency."

Although most Americans get health insurance from their employers, just 46 percent of small businesses offer health insurance compared to 98 percent of large employers. In her testimony, Chao said AHPs present an ideal opportunity to expand health insurance coverage for workers. By banding together through AHPs, small employers would gain many of the economic and legal advantages currently enjoyed by large employers and union plans. The resulting savings for small businesses, now paying as much as 20 to 30 percent more in premiums than large, self-insured companies, would allow them to offer more competitive compensation packages that would attract and benefit workers.

Chao expressed strong support for the Small Business Fairness Act (S.406) introduced by Senator Olympia Snow and made a commitment to work with the committee to help enact and administer the legislation. The U.S. Department of Labor presently regulates self-insured health plans providing benefits to approximately 70 million American workers, retirees and their families and would assume responsibility for AHP protections as well. The department also shares regulatory responsibility with the states for about 60 million participants in fully-insured health plans. The full text of the Secretary's testimony is available on the Internet at "www.dol.gov."