House Bill Details Health Plan Options for Small Business

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By Alex Ruoff

House Republicans want to empower small businesses to form their own health insurance plans for their employees, lawmakers said March 1.

The House Education and the Workforce Committee is considering a bill (H.R. 1101) that would allow businesses to create association health plans, groups of employees of member companies that band together to negotiate better health plans.

The changes together are small portions of the House’s replacement of the Affordable Care Act, Rep. Virginia Foxx (R-N.C.) said during a March 1 hearing on the bills. Foxx said the nation must turn from the ACA because, she said, it has raised health insurance premiums across the country.

ACA proponents, however, point to evidence that most people purchasing insurance on the individual market place have been shielded from such increases by the ACA’s premium assistance.

Health insurance regulators, however, told lawmakers the association health plans allowed by the small-business bill would only segment the market for small health plans into the healthy and unhealthy by allowing these new plans to cherry-pick beneficiaries. The National Association of Insurance Commissioners (NAIC), in a letter to the committee, also warned the change would leave the new plans unregulated and open to fraud.

House Democrats also used the hearing as a proxy battle over repealing the ACA. Rep. Bobby Scott (D-Va.), ranking member of the Education and Workforce Committee, said the proposals would only shift insurance costs from employers onto employees.

In other legislation , lawmakers are considering proposing to change how stop-loss insurance is regulated and protections for employee wellness programs. The committee is set to mark up the bills in coming weeks, but a hearing hasn’t been scheduled.

Association Health Plans

Association health plans, or AHPs, have existed for some time and are often overseen by trade associations or professional groups. They can help small groups band together to help their members leave the smaller group and individual health insurance markets—which are often subject to yearly changes in premiums and covered benefits—and enter the large group market, generally considered more stable. Also the plan sponsor, for example, an association, may self-insure health benefits for its members’ employees under the model.

Regulators, in their letter, said permitting more businesses to band together to form large insurance groups would take more healthy people out of the small and individual market, exacerbating the problems of those markets.

“This legislation would encourage AHPs to ‘cherry-pick’ healthy groups by designing benefit packages and setting rates so that unhealthy groups are disadvantaged,” the NAIC said. “This, in turn, would make existing state risk pools even riskier and more expensive for insurance carriers, thus making it even harder for sick groups to afford insurance.”

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

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