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House Approves AHPs to Boost Access to Affordable Health Care 

WASHINGTON – The U.S. House of Representatives took action today to help more Americans access quality health care coverage and reduce the number of uninsured individuals.  The House voted 262-162 to approve legislation cosponsored by Wisconsin’s First District Congressman Paul Ryan that allows small businesses to join together through trade associations to purchase health insurance for their workers, enabling them to reap the benefits of group-buying power to lower costs.   It also enables self-employed people to get access to AHPs through their trade associations.  Ryan, who has long supported these association health plans (AHPs) as part of the solution to the problem of the uninsured, voted in favor of the legislation – H.R. 660, the Small Business Health Fairness Act. 

“Rising health costs in Wisconsin have become a state crisis.  These escalating costs are making it tougher and tougher for Wisconsin’s small businesses to offer good health care coverage for their workers,” Ryan said.  “On their own, they aren’t large enough to tap into the same discounts and savings that Fortune 500 companies or trade unions use to reduce costs and provide more benefits.   But by pooling together through association health plans they can increase their bargaining power and lower their costs.  This should help more employers offer health coverage and get more of Wisconsin’s workers and their families insured.  It is just part of the solution – but it’s an important part.”  

Insurers selling directly to small business employers typically incur administrative costs of 20 – 25 percent.  The Congressional Budget Office (CBO) has estimated that small businesses that obtain insurance through AHPs will save an average of 13 percent.  This cost savings means more purchasing power for small businesses, helping them offer coverage for employees and their families.  Nearly 60 percent of uninsured Americans are employed by small businesses, or are dependent on someone who is employed by a small business. 

Among its specifics, the bipartisan legislation that the House passed: 

·        Sets eligibility requirements, establishing that an AHP is a group health plan that offers fully-insured and/or self-insured medical benefits, has been certified by the U.S. Department of Labor, and is operated by a board of trustees with complete fiscal control and responsibility for all operations.  The association sponsoring the plan must have been in existence for at least three years for substantial purposes other than providing health insurance coverage. 

·        Makes clear that AHPs must comply with the law that prohibits group health plans from excluding high-risk individuals with high claims experience.

·        Requires AHPs to be financially responsible by maintaining reserves for potential costs and other obligations.  AHPs must also obtain aggregate and specific stop-loss insurance, indemnification insurance for any claims if the plan is terminated, and must also make annual payments to an Association Health Plan Fund to guarantee that indemnification insurance is always available. 

·        Gives certified AHPs freedom from costly state benefit mandates, except that AHPs must comply with federal and state laws that require coverage of specific diseases.  This would give small businesses that insure their workers through AHPs the same sort of exemption from state mandates that is currently permitted for large employers who offer health benefits to workers in multiple states.

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