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On May 31, 2003, the ACFAS Board of Directors voted to oppose the federal Association Health Plan legislation (H.R. 660 and S. 545).
As you are aware, a large portion of uninsured Americans ineligible for public insurance programs are in families that have one or more members that work for a small employer that either does not offer health insurance or the premiums are too expensive for the family to afford. There are a number of proposals that seek to help these workers in affording quality health coverage, including legislation that would allow Association Health Plans (AHP) to be exempt from state laws and mandates.
The AAHP and BCBSA have asked that we join a coalition, "Insure Our Future," that opposes federal legislation that would exempt these plans from state regulations and other consumer safeguards. This document is meant to provide a discussion of the issue. |
Association Health Plans are groups of small employers that band together and purchase health coverage and are now regulated by the states. Legislation that has been introduced in Congress would allow AHPs to be exempt from state regulation, oversight, and mandates and would be federally regulated by the Department of Labor. Further, it subjects AHPs to the Employee Retirement Income Security Act (ERISA) of 1974.
After many years of relentless struggles, now 49 states have prompt-payment rules, 47 states have laws preventing “gag rules” against physicians, 42 require plans to cover emergency services that a prudent layperson would consider necessary, and 37 require plans to cover transitional care from a practitioner who leaves a network. Any of your successful state legislative efforts concerning barriers to practice for podiatric foot and ankle surgeons such as discipline of provider, payment equality and any willing provider mandates would have no impact on services provided to patients covered under this proposed federal legislation.
Legislation has been introduced in the House (H.R. 660) by Congressman Ernie Fletcher (R-KY) with 75 cosponsors- the companion Senate bill (S. 545) was introduced by Sen. Olympia Snowe (R-ME), chair of the Senate Small Business and Entrepreneurship Committee. Many believe that prospects for passage are better this year as AHPs are a priority for the Republican Leadership, the White House, and the Administration.
Organizations representing over 12 million employers and 80 million workers are supporting and promoting the AHP legislation in Congress, led by the National Federation of Independent Business (NFIB), the American Society of Association Executives (ASAE), the National Association of Manufacturers, and the U.S. Chamber of Commerce. This legislation is also part of the Administration and Republican leadership's health care platform. The President, Vice-President, and Secretary of the Department of Labor (DOL) have been vocally supportive of the legislation. Proponents believe that this legislation would provide workers employed in small businesses and the self-employed with access and choice in affordable plan options similar to that now enjoyed by workers in corporate and union health plans that they call "Fortune 500-style health benefits."
Of the more than 40 million uninsured Americans, roughly half reside in a family employed by a small business where either the employer does not offer health insurance or the premiums are too expensive for the worker to afford for him/herself and his/her family. Proponents of AHP legislation believe that these plans would make health insurance coverage affordable for these working families and would:
1) Reduce health insurance costs by allowing small businesses to join together to obtain the same economies of scale, purchasing clout, and administrative efficiencies now available to employees In large employer and union health plans,
2) Provide new coverage options for the small business workers and self-employed, promoting greater competition and choice in health insurance markets; and
3) Provide Federal standards for AHP certification that would provide sufficient consumer protections—at least equivalent to the protections provided under state regulation of health insurance.
A broad and growing coalition of groups have come together to oppose the AHP legislation. This coalition includes insurers (Blue Cross Blue Shield Association (BCBSA), the Health Insurance Association of America (HIAA), and the American Association of Health Plans (AAHP)), Provider groups (e.g. American Academy of Child and Adolescent Psychiatry, the American Nurses Association, the American Psychological Association, and the National Association of Social Workers), disability groups (e.g. the American Association of People with Disabilities, the American Association on Mental Retardation, and the United Cerebral Palsy Association), as well as patient advocacy organizations (e.g. Families USA, National Patient Advocate Foundation, Citizen Action groups, and the Coalition against Insurance Fraud).
The National Governors Association (NGA), the National Conference of State Legislatures (NCSL), and the National Association of Insurance Commissioners (NAIC) also oppose this legislation.
Opponents of AHP legislation support the objective of making health insurance more affordable and accessible, but believe that this legislation would do more harm than good.
The main arguments against AHPs are:
1. Studies, including a study by the Congressional Budget Office (CBO), have shown that these AHPs are unlikely to reduce health insurance costs. The CBO study predicted that rates would increase for four of five small businesses as a result of this legislation and that minimal increases would be made in the overall number of insured.
2. AHPs would undermine state health insurance reforms because this legislation would exempt these plans from state regulation, mandates and oversight requirements, which is problematic for many reasons, including:
a. State mandates provide an important guideline to ensure appropriate benefits are being offered (and purchased) in the private health insurance market. Such mandates include requiring coverage for maternity benefits, mental health coverage, breast and cervical cancer screening, contraceptive drugs and devices, and direct access to ob-gyns or nurse-midwives.
b. AHPs would be allowed to "cherry pick" healthy Individuals into their plans by targeting certain healthier industries, designing limited, less-expensive benefits packages, and discriminate based on health status through high rates for the unhealthy employer groups. "Cherry picking" will drive up costs in the state regulated market and leave the "unhealthy" individuals without access to affordable health coverage.
c. AHPs would not be subject to the state rating requirements that limit how much an insurer can charge for coverage and limit an insurer's ability to charge higher premiums or deny coverage based on health status.
3. The Federal solvency standards for AHPs are inadequate to protect consumers against possible fraud and abuse and to protect providers from being stuck with unpaid clams if an AHP were to become insolvent. Unlike state solvency standards that ensure that insurers can manage the risk they are taking on (reporting requirements, audits by independent actuaries, and capital rules), the federal rules for AHPs are minimal and weak. AHP legislation does not provide any guarantee fund that will pay unpaid medical bills in the case of an insolvency, unlike state guaranty funds that are set up for this purpose.
4. Because state external review laws would be exempted, consumers would not be guaranteed a fair handling of disputes over claims denials nor would they be guaranteed a right to appeal claims decisions to an independent external review panel.
5. The Department of Labor (DOL), which would be responsible for overseeing these new AHP plans, does not have adequate resources. DOL does not have the staff or the infrastructure in place to handle consumer calls and complaints, oversee and enforce rules, investigate problems, and resolve issues.
6. AHPs are a high risk and history has proven with multiple-employer welfare arrangements (MEWAs) and similar association health plan coverage that these plans are wrought with fraud and abuse. Fraudulent association health plans and phony MEWAs in the period of time between 1998 and 1991 left 400,000 people with over $123 million in unpaid medical claims.
ACFAS members are strongly encouraged to contact your U.S. Representatives and Senators immediately to voice your strong opposition to this legislation.
APMA's E-Advocacy Web site offers draft letters and a convenient way for members to submit letters to their representatives. Visit APMA's E-Advocacy site. (You will need your APMA number to log in.)