Study Says AHPs Would Hike Health Insurance Costs

Average 6 percent increase predicted for small-business market if association health plan legislation enacted
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WASHINGTON, June 10/U.S. Newswire -- Health insurance costs would increase by an average of 6 percent overall in the small-business market and the number of uninsured would increase by more than 1 million if federal association health plan (AHP) legislation were enacted, according to a study released last week by National Small Business United (NSBU).

AHP legislation would allow national trade associations to offer health insurance to members under the Employee Retirement Income Security Act. These plans could be offered across state lines without being subject to state rules and oversight. The study (available in PDF format at, "Impact of Association

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See "Association Health Plans: A Godsend, or a Recipe for Disaster?" for more on AHP legislation.

Health Plan Legislation on Premiums and Coverage for Small Employers," by Karen Bender and Beth Fritchen of Mercer Risk, Finance and Insurance, is the most extensive one yet on the potential effects of AHPs on the small-business health insurance market. According to the study, AHPs are expected to reduce premiums by an average of 10 percent for their participants, but the state-regulated market would incur price increases of an average of 26 percent, resulting in an overall average increase of 6 percent for the small-business market. "Common sense tells us the more regulated the state market, the more adversely the premiums in that market will be impacted by AHPs," says Bender. "The unintended consequence is that the number of uninsured will go up as premiums increase in the regulated market."

"We have no doubt that AHP proponents sincerely want to help small firms," says William Lindsay, chair of NSBU. "But the unintended consequences would be catastrophic."

Copyright 2003 U.S. Newswire

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