Association Health Plan Bill Passes House, But Faces Tough Test in U.S. Senate

June 25, 2004
With skyrocketing health-care costs still a huge concern to small businesses, several association trade organizations are applauding a move by the U.S. House of Representatives to pass H.R. 4281, the Small Business Health Fairness Act of 2004.

With skyrocketing health-care costs still a huge concern to small businesses, several association trade organizations are applauding a move by the U.S. House of Representatives to pass H.R. 4281, the Small Business Health Fairness Act of 2004.

The proposed legislation, which needs approval from the Senate before passage, would allow trade associations to provide members with health insurance that could cover themselves, their employees and their families. Through an Association Health Plan (AHP), small-business owners and employees would benefit from the same economies of scale, purchasing clout and administrative efficiencies that big business and labor unions already enjoy.

“You would not have the regulatory redundancy,” said Jim Anderson, vice president for government relations for the National Association of Wholesaler-Distributors (NAW), Washington, D.C. “You would have the ability to operate uniformly across state lines, and get the economies of scale and the bargaining power in the marketplace that currently smaller businesses and mid-size businesses simply do not have because they themselves don’t have the capacity to self-fund a health plan.”

NAW has supported AHP legislation for years. Other industry advocates include the National Electrical Manufacturers Association (NEMRA), Tarrytown, N.Y.; and the National Association of Electrical Distributors (NAED), St. Louis. The proposed legislation could save small business owners as much as 25 percent on health insurance costs and help 8 million uninsured Americans, according to Labor Secretary Elaine Chao, who spoke recently at a Natonal Federation of Independent Business (NFIB), Washington, D.C., luncheon.

More than 44 million Americans lack health insurance and approximately 60 percent of the uninsured are employed by small businesses or are depending on someone who is, according to the U.S. Chamber of Commerce. Small employers face significant challenges in accessing affordable health insurance coverage. On average, their premiums are 20 to 30 percent higher than that of large self-insured companies. Administrative expenses for small group plans also are more expensive.

While the proposed AHP legislation has the backing of the U.S. House of Representatives, it’s a controversial bill that faces strong opposition from the health insurance industry. Defeating the legislation is the Blue Cross and Blue Shield’s No. 1 legislative priority for the 108th Congress, said NAW’s Anderson. Other groups, including the National Association of Insurance Commissioners, Kansas City, Mo., are also opposing the proposed legislation.

The bill may struggle to get attention from the Senate, and the chances of getting a controversial bill passed by the Senate in an election year are slim, he said. Once the Senate reconvenes after the Fourth of July recess, it will be busy passing “must-do” legislation.

Another concern is the cost of health-care premiums. A posting on the Web site of the Manufacturers’ Agents National Association (MANA) cautions MANA reps to not expect a drastic reduction in health-care premiums.

Health insurance is one of the top three problems facing America’s small business owners, according to a study released in late May by the NFIB Research Foundation and Wells Fargo.

While the NFIB study said health-care costs have been a concern for more than 15 years, concerns seem to have spiked dramatically. In 2000, 47 percent of those surveyed by NFIB citied health-care costs as a “critical” problem. In 2004, two-thirds of respondents listed health-care costs as a “critical” problem, an 18-percentage point

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