Linda Watters, commissioner of the Office of Financial and Insurance Services , warned that the legislation – H.R. 525, also known as the Small Business Health Fairness Act – would do more harm to the system than good, according to A.M Best.
She also said that the proposed legislation would allow AHPs to be an unregulated version of multiple-employer welfare arrangements. In the 1980s, she claims, these arrangements left over 400,000 consumers with $123 million in unpaid claims from large-scale fraud, insolvency and bankruptcies.
Governor Jennifer Granholm also came out in opposition to the bill. In a statement, she asserted that state’s goal was to “make health care more affordable and accessible for Michigan families, not remove the protections that ensure thataffordability and accessibility.”
Her reasons were numerous. “Those who share my concerns with association health plans center their discussion around two main points,” she said in the statement. “First, AHPs would further fragment and destabilize the small group market, resulting in higherpremiums for many small businesses. Second, AHPs would be exempt fromstate solvency requirements, patient protections and regulatoryoversight, which would place consumers at risk.”
There are other state regulations that AHPs would be exempt from, A.M. Best reports. They include:
- The Michigan Patient Bill of Rights.
- The Patient’s Right to Independent Review Act.
- Timely claims processing and payment procedure legislation enacted in 2002.
The bill is backed by the Bush administration and by GOP majorities in both the House and Senate. Most large health insurance organizations are against the bill, including America’s Health Insurance Plans, the Blue Cross Blue Shield Association and the National Association of Health Underwriters (See Congressional Group Reintroduces Association Health Plan Bill ).
According to figures gathered by the Senate sponsor of the bill, Senator Olympia Snowe (R-Maine), AHPs have been found to operate with administrative costs that are 13% to 30% lower than those of more traditional health plans.
The bill has already been cleared by the US House Committee on Education and the Workforce by a vote of 25-22.