Banding Together For Health Insurance
What, you ask, are association health plans? Good question. Even President Bush mentioned them by name in his recent State of the Union speech. He's for the idea. As we prepared to make the rounds to meet with select senators last March, we met a lot of plumbing contractors and state PHCC executives who are for the idea, too. Well, all right. Everybody we met that day was for AHPs.
While there were other topics on the legislative agenda, none took center stage quite like this legislation that passed the House in bipartisan fashion a year ago, and is now before the Senate. Since this isn't the type of legislation that gets a lot of publicity, here's a question-and-answer session based, in part, on what we saw and heard that day, as well as the day before as we spent the afternoon preparing to meet legislators:
OK, just what are these things called “association health plans?”
It's a pretty simple concept really. Many readers belong to the PHCC-NA, right? There are a lot of reasons for joining the trade group, and here's one more: The AHP legislation would allow the PHCC-NA to offer its members health insurance.
Just the PHCC-NA?
Not quite. Intended to control costs and improve access to coverage for small employers and individuals, AHPs would allow all bona-fide business and professional association to offer health benefits to their members.
The thinking goes that such a pooled resource would be able to offer better coverage at a lower cost, certainly better and for less than a sole owner or an owner with a few employees could hope to get by their lonesomes.
As Senator Jim Talent (R-MO) told everyone at the morning's breakfast meeting, AHPs would be “sort of like a small business health plan co-op” that would give small business owners access to the type of programs now available to larger businesses. “This is the number one concrete problem confronting small business today,” he added.
And Jim Talent is ...?
Turns out Talent has been helping push this type of legislation from many different vantage points over the years. Talent used to be a congressman who helped win House approval for AHPs in the past only to see it die not once, but twice in the Senate. Then he became a lobbyist pushing for this type of legislation, again only to see it killed in the Senate. Now, here he is elected to the Senate in 2002 sitting right in the belly of the beast, helping pass the latest version of AHP legislation.
I keep hearing “small business” mentioned. Why is this such a benefit for small businesses?
Actually, the formal title of the AHP bill is, “The Small Business Health Care Fairness Act.” Certainly, any size business can complain about the costs (and the premium increases) of health care insurance. However, plenty of small businesses have seen their premiums sky rocket. Many small business simply can't afford to offer any type of health insurance.
So the small guys get “big” by banding together and gain negotiating power. That whole “strength in numbers.” Why can't they do this now?
When everything is said and done, the AHP bill is essentially a federal preemption of state rules that determine how health care insurance operates in any one state.
Right now, corporations and unions operate under the provisions spelled out in the Employee Retirement Income Security Act. Don't get us wrong: There are certainly plenty of rules and regulations in ERISA, but they are more lenient than state rules and offer big guys much more flexibility in designing a health care package than a little guy has. In other words, the big guys have alternatives.
Sounds like the states are the big stumbling block?
The problems are that regulations differ from state to state. States have passed more than 1,500 mandated benefit laws, which makes it expensive to comply with one set and an administrative nightmare to comply with more than one set.
You know how everyone laughs at those antiquated laws that are somehow still on the books, such as no cows are allowed in your driveway past 9 p.m. in Iowa? Well, it's not funny when Minnesota says hair transplants must be included in health plans when all you want is a basic plan so you can go to the doctor to find out why it hurts when you go like that.
Don't go like that.
I'll keep that in mind. Freed from state rules, AHPs could offer an array of benefits from basic to, who knows, maybe a Cadillac plan that includes that Minnesota makeover. Think flexibility. Think affordability. Think choice.
By the way, the AHPs would also be able to “self-insure,” which would allow them to pay claims from their own funds. That's something only corporations or unions are large enough to afford. It's an important cost-savings measure that's a bit hard to explain. Besides, we'd rather pick on Minnesota.
I always knew there had to be a reason anyone chose to stay in Minnesota. Sounds like a great deal. Who would be against this?
Funny you should ask. We purposefully tagged along with the New York PHCC contingent since our stops would be at the offices of Senators Hillary Rodham Clinton and Chuck Schumer, both liberals who we doubted would be for this bill.
As we waited outside Schumer's office for our appointment, who comes walking down the hallway but Schumer himself. Since our appointment was with an aide, we took the opportunity to make our case directly to the senator. “Who would be against this bill?” he asked after we explained our case. “Who would be against this bill?”
Well, namely him. A basic liberal argument against AHPs is that unions offer a great health care package, how about joining a union? That's true. Unions do offer great packages and the construction unions are against the bill. Of course, one big reason that unions offer a great deal is ERISA.
And what about Senator Clinton?
Another liberal argument against AHPs is that the real answer to the high price of health care is to offer a government-run universal health care program. We doubt the architect of Clintoncare is going to for anything but a single-payer system. Not surprising, Clinton's aide held our meeting as we all stood up in a stairway alcove. At least Schumer's aide let us a sit down in a conference room.
Jeez, so it's true that the two things you don't want to see made are laws and sausage.
Yeah, that's true. I don't know if lobbyists go around every single business day, but when we walked into Clinton's office, there were so many people waiting in the anteroom, that we had to stand outside in the hallway to wait our turn.
Let's get back to the bill. It does sound good, but I'm sure there's a reasonable argument against the bill itself. What do AHP opponents say?
What we heard from both Clinton and Schumer's staff boiled down to what kind of government oversight there would be to how such plans would operate. In addition to all those state laws that mandate the type of health care its residents should have, these laws also cover such consumer protections as controls on premiums, appeals procedures and contract language.
One of the big objections we hear was that since AHPs could short-cut state regulations and “cherry pick” in order to get the best insurance risks.
What's cherry picking about?
Opponents say AHPs would offer limited “bare bones” plans that would only be attractive to those who are relatively healthy. With that the case, the unhealthy insured among us with, God forbid, actual medical bills to pay for, would be left to the “regular” insurance market. Since that would leave insurers with no way to spread out the risk, the whole insurance market would be destabilized and we'd all be paying more for premiums.
Sounds bad. What about it?
The legislation makes clear that AHPs must comply with the Health Insurance Portability and Accountability Act, which makes it illegal for group health plans to exclude high-risk individuals or employers with high claims experience. AHPs could not charge a participating company more than another on the basis of the health status of the companies' employees or their families.
The old HIPPA Act to the rescue, huh?
There were other oversight issues raised, too. This would, after all, amount to a federal regulation so Big Brother would be involved, but some argue that this brother isn't big enough.
In this case, that brother is the Department of Labor. While you'd think the DOL is big enough, opponents say it doesn't have the resources or the expertise to enforce AHPs.
Proponents say that the DOL does already have much of what it needs, and the AHP legislation includes provisions to give it more enforcement muscle.
An AHP would exist, for example, only after the DOL has certified it. The AHP legislation includes strong solvency standards and criminal penalties for violating AHP standards. Keep in mind, the DOL isn't exactly new to this game and has a very big Big Brother role in existing federal group health plan laws.
OK, so you're about to speak from the floor of the Senate to tell your colleagues why they should vote “yes” on AHPs. What do you say?
By establishing uniform federal standards for association health plans, small employers will be able to achieve greater purchasing power, administrative efficiencies and flexibility in benefits design. Strong federal certification and solvency standards will assure that all health care benefits promised by the AHPs will be there when needed and that the associations provide consistent service to all eligible small businesses regardless of their expected medical costs.
OK, so you're about to speak from the floor of the Senate to tell your colleagues why they should vote “no” on AHPs. What do you say?
AHPs would be exempted from all state regulations, consumer protections and other insurance standards. Rather than providing new options, this type of unregulated entity would destabilize the state health care markets and jeopardize the efforts that states are currently undertaking to address the issue of the uninsured.
Great! Now I'm for it and against it.
Well, here's one way to think about the issue. We went there to represent plumbing and heating contractors. But there's about 15,000 other trade association in this country, many of which represent other small business besides our readers, but share the same common concerns.
Consequently, there's plenty of other trade groups that oppose, and for all we know, they had appointments the next day.
While we were lobbyist for one group, the big picture issue that AHPs address is providing insurance to uninsured Americans.
Right now, that number is 43.6 million. With the economy we've had lately, there's no doubt that plenty of these people lack health insurance because they lack a job.
So it's temporary?
Let's hope. But a lot of American who don't have health insurance are actually working - either because their employer doesn't offer it or they are self-employed.
According to a survey we read, only 55 percent of companies with 3 to 9 employees offer coverage, compared with 74 percent of those with 10 to 24 workers; and 88 percent of firms with 25 to 49 workers and almost all firms exceeding 200 workers. “High premiums” are the reason cited by 68 percent of all companies with fewer than 200 that do not offer health insurance.
So AHPs are the answer to providing insurance for the uninsured?
Maybe. Maybe not.
You sound just like a politician now.
Sorry, it's hard not to even from just one day. It's certainly a way since AHPs sound as if they would lower direct costs by reducing compliance and other administrative expenses while creating a larger market for insurance than what exists now.
The studies we learned about during the Legislative Day say that between 2.1 million and 8.5 million uninsured workers would gain coverage from AHP legislation.
While much of what you read and heard that day had to do with making insurance “cheaper,” we did find an interesting nugget of information that would enable AHPs to expand access to health coverage beyond premium reductions.
I'm all ears.
People don't trust insurance brokers, they don't have all the access to information they need describing health plans and benefits and they don't understand the terms of available plans.
AHPs will help overcome these barriers to coverage. “AHPs will be administered by organization to which small businesses already belong, and thus, have existing relationships and communication links,” the research said. “Even if there is no price reduction ..., they would result in increase in insurance coverage because they overcome some the non-price barriers.”
Editor's note: For more information on where the AHP bill stands and other legislative activities organized by PHCC-NA, log on to www.phccweb.org.
A Postscript The association health plan legislation is currently stalled in the Senate. Meanwhile, the House of Representatives approved on May 14 essentially the same AHP legislation it passed in June 2003.
The new bill number is H.R. 4281 and carries the same title with the only change being the year: "Small Business Health Fairness Act of 2004.”
Lake Coulson, vice president/government relations for PHCC-NA, reports that the new bill is viewed as a strategic move to push the Senate into action.
Coulson says he is very encouraged that Sen. Robert Byrd (D-WV) has agreed to become the first Democrat so-sponsor of the legislation. “This could pave the way for other Democrats to support the bill in the Senate,” he said.
In related news, the House will vote separately soon on two other health reform bills, a medical malpractice bill and legislation to permit the transfer of unused Flexible Spending Account funds into Health Savings Accounts.
Other PHCC-NA Political Efforts: This is the eighth year that the PHCC-National Association has sponsored a Legislative Day, and we learned about other PHCC-NA legislation activities while in D.C.
“PHCC members rank representation of the industry as their No. 1 member benefit,” Coulson says, “Legislative Day is just one of the ways PHCC provides members with an opportunity to get involved.”
Here are a few other highlights of the PHCC-NA's presence on Capitol Hill:
- PACs: In just the last two years, contributions to the association's Political Action Committee have grown from $10,000 to $100,000. Coulson says that puts the PAC on track to meet its goal of raising a total of $500,000 over the next five years.
“In order to ensure a favorable climate for the PHC industry, we need a collective, strong voice to be heard in D.C.,” says contractors Scott Ziegler, Ray A. Shaffer, Schwenksville, Pa., and PAC chairman. “Developing relationships with these lawmakers is the only way to guarantee our industry a 'seat at the table.' ”
PHCC runs a “principle” PAC meaning that it contributes only to those legislators who vote with the association's legislative viewpoints more than 70 percent of the time.
- Legislative Activities: Membership surveys indicate that the top three legislative issues remain: 1) addressing the escalating cost of health and general liability insurance; 2) elimination of the death tax and overall tax reduction; and 3) unfair utility competition.
PHCC also recently adopted a position paper supporting legal liability reform. Supporting tort reform may be one of the keys to providing affordable general liability insurance for our members, Coulson adds.
- Web Site: PHCC recently created a Legislative Action Center where its members can send e-mail messages and letters through the PHCC Web site, www.phccweb.org to members of Congress. Coulson plans other grassroots uses of the Web site. This Web site also contains information to assist members learn about where their legislators voted on those issues affecting the industry.
This legislative scorecard serves as the key criteria used in making PAC contributions,” Ziegler added.