U.S. mulls health plans for small businesses again

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A key U.S. Senate committee chairman said Thursday he plans to act on legislation this year to help small businesses buy affordable health insurance, but that he has not made up his mind on whether that bill should include controversial provisions to allow federally regulated pools called “Association Health Plans.”

The U.S. House has passed bills that would allow creation of interstate groups to help small firms band together outside of state regulation at least seven times in the past decade. But the Senate has so far refused to go along.

Senate Health, Education, Labor and Pensions Committee Chairman, Mike Enzi of Wyoming, said that advocates of AHPs, as the plans are known, “make a strong case” that the pools would help expand choice and lower costs for small firms that frequently have trouble finding affordable coverage.

But at the same time, he said, “I am mindful of criticisms” that the pools could actually hurt consumers.

Both opinions were on display at the hearing. Joseph Rossmann, Vice President of Fringe Benefits for the Associated Builders and Contractors, said AHPs are needed now more than ever.

“Massive premium increases of 30 percent, 40 percent and higher, and/or benefit reductions, are typical of what small businesses throughout the nation are experiencing today,” he told the committee. “Clearly current initiatives aimed at expanding access to affordable health care are not working.”

But other witnesses said AHPs could end up doing more harm than good.

Kansas Insurance Commissioner Sandy Praeger, testifying on behalf of the National Association of Insurance Commissioners, said that she doubts the U.S. Department of Labor, which would be charged with regulating the plans, is up to the task.

“The Department of Labor has neither the resources nor the expertise to regulate insurance products,” she said. “Strict oversight is required and this will only occur if all health plans delivered through associations are licensed and regulated at the state level,” she added.

Karen Ignagni, President and CEO of America’s Health Insurance Plans, also called AHPs a bad idea that could result in higher rates for many small firms.

“While low rates initially may seem attractive to small businesses with a healthy workforce, if one of their workers developed a significant illness, they would face a rate hike from the AHP the following year,” she testified. “Ultimately the result would be a market in which a shrinking portion of healthy business would be covered by the AHP while businesses whose workers have significant health needs would be driven out of the AHP.”

Ignagni said insurers are already responding to existing ways to help provide more affordable policies, in particular by combining high-deductible “catastrophic” coverage with Health Savings Accounts, or HSAs.

Ignagni said that her group will release figures in the next two weeks showing that more than a million Americans have signed up for HSAs in the 16 months they have been available. Just under 40 percent of those were previously uninsured, Ignagni said.

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