Association Health Plans/Small Business Health Plans

Rising health care costs are having a profound effect on employers, particularly small businesses, that voluntarily choose to provide health insurance as a benefit to their employees. For each of the last several years, the typical health insurance premium has increased by at least ten percent, making it more and more difficult for employers to offer health insurance as an employee benefit. In an effort to make health insurance more affordable, in the 109^th Congress, Senator Snowe (R-ME) introduced legislation in the Senate, S.406, to encourage the expansion of Association Health Plans (AHPs), and Senator Enzi (R-WY) introduced S.1955, the Health Insurance Modernization and Affordability Act, to create Small Business Health Plans (SBHPs).

AHPs and SBHPs are designed to provide a mechanism for employers to band together to obtain the benefit of group purchasing power when buying health insurance. Proponents of AHPs and SBHPs maintain that this purchasing power will help constrain the rising costs of health insurance so that employers do not have to stop offering health insurance benefits to their employees altogether, thus further contributing to the already large number of uninsured Americans. In addition to the group purchasing benefits, under S.406, AHPs would be exempt from the various state laws and state insurance mandates and be governed instead by a federal law known as ERISA.

Opponents of AHPs have expressed concerns that federal insurance protections for the consumer are inadequate. Like S.406, S.1955 would exempt coverage offered through SBHPs from some state insurance laws.

On March 15, 2006, the Senate Committee on Health, Education, Labor and Pensions (HELP) passed S.1955 by a vote of 11-9. This legislation would allow SBHPs to offer a basic benefit plan that would be exempt from all states’ benefit requirements as long as the SBHP also offers an enhanced benefit to participating employers. The enhanced benefit option must include at least those covered benefits, services, and categories of providers as are covered by a state employee health benefit plan in one of the five most populous states (California, Texas, New York, Florida and Illinois). The bill would provide the SBHPs with the discretion to determine the benefit plans, with the exception that the plans must be consistent with the basic benefit and enhanced benefit rules.

On May 11, 2006, the Senate held a cloture vote on S.1955 to determine if the Senate should limit debate of this legislation and require all pending amendments to the legislation to be germane. While I voted in support of cloture to focus the debate on SBHPs specifically, the legislation did not obtain the sixty votes necessary to end debate. Accordingly, the bill did not advance and further consideration of the bill did not continue.

The issue of whether to encourage the expansion of AHPs or SBHPs is one that I continue to examine, along with other proposals that are aimed at reducing the number of uninsured Americans and at helping Americans cope with increasing health care costs.

Throughout my nearly thirty years of service in the United States Senate, I have worked in support of healthcare legislation to help increase healthcare access and quality, and I remain committed to improving the healthcare system for all Americans. These factors will be the at the forefront of my examination of all healthcare proposals.