Small-business owners unable to afford the high cost of health
insurance may soon have some good news for their employees.
Legislation is moving forward that allows small-business trade
associations such as the U.S. Chamber of Commerce and the National
Association for the Self-Employed to set up inexpensive,
self-insured national health insurance pools for their members.
The Expanded Portability and Health Insurance Coverage acts
(H.R. 1515/S.729), sponsored by Rep. Harris W. Fawell (R-IL) and
Sen. Tim Hutchinson (R-AR), will ideally encourage more small
businesses to provide insurance for their employees by establishing
these Association Health Plans (AHPs).
Neil Trautwein, manager of health-care policy for the U.S.
Chamber of Commerce in Washington, DC, estimates AHPs will cut
small businesses' insurance premiums by up to 50 percent. Why
the big savings? Under the new bills, AHPs would not be held to the
minimum benefit standards states typically impose on businesses,
allowing companies to offer less coverage to employees. The federal
government, not the states, would certify and regulate AHPs.
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State insurance commissioners and the insurance industry, which
clearly stand to lose if the bill passes, complain that the federal
government would have a hard time assuring solvency of AHPs. In
response, when the House Committee on Education and the Workforce
passed the Fawell bill on June 12, it included an amendment that
would require AHPs to charge a maximum 2 percent fee on each
premium which could be used to bail out the AHP provider if it
suddenly experienced financial problems. (S.729 currently contains
no such provision.)
These groups are also concerned about a huge new insurance
market they believe the federal government will not be able to
police. In a recent letter, the National Governors'
Association, the National Conference of State Legislatures and the
National Association of Insurance Commissioners knocked the two
bills, arguing that they "substitute critical state oversight
with inadequate federal standards to protect consumers and prevent
plan fraud and abuse."
Trautwein counters that the AHP bills require stop-loss,
indemnity and other basic provisions that ensure the safety, as
much as possible, of AHPs.
The Fawell bill passed committee, though by a narrow margin. At
press time, S.729 had not been voted on in any stage, and H.R. 1515
was scheduled to be included in the omnibus budget reconciliation
package, which includes tax cuts, Medicare changes and more.
Although Clinton would prefer to see state--rather than
federal--regulations regarding health insurance, it is unlikely he
would veto the provision because of its congressional support as a
new way to provide health insurance to children, one of the cause
célèbres of this Congress.
The emergence of inexpensive health plans offered by trade
associations has the potential to shrink the number of uninsured
employees like a stomach after a tummy tuck.
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