Proposed Health Plans May Provide More Coverage

Proposal Comparisons

Click here for a chart detailing issues attached to the debate about association health plans. (Chart requires Adobe Acrobat viewer. Click here for a free copy.)

Small businesses may soon have more health care options for employees.

The Small Business Health Fairness Act, a proposal in the current session of Congress, would allow businesses and individuals to negotiate lower health insurance costs through trade or professional organizations.

Essentially an amendment of the Employee Retirement Income Security Act of 1974 (ERISA), the bill will “provide for establishment and governance of association health plans (AHPs), which are group health plans whose sponsors are trade, industry, professional, chamber of commerce, or similar business associations,” the proposal reads.

Associations and their APHs will be held to the same standards as those under ERISA.

H.R. 525 has already passed the U.S. House of Representatives with a 109 to 41 vote, and its sister, Senate Bill 406, is up for review by the U.S. Senate. In recent years, the proposal has a history of passing the House and not even getting play on the Senate floor. But with the addition of four republicans in the Senate last year, many believe the bill will have its marching orders as a law sometime this session.

Among supporters is the National Association of Realtors based in Chicago and the American Society of Safety Engineers in Des Plaines, Ill.

The NAR estimates 330,000 of its 1.2 million members are uninsured and that AHPs will help those individuals afford coverage.

Bob Balhorn, government affairs director for the Arkansas Realtors Association in Little Rock, said Realtors are independent contractors so it’s difficult for many of them to obtain affordable insurance. If the current proposals are passed, more and more members would be able to afford insurance coverage, he said.

A significant number of NAR members only have access to insurance through their spouses, Balhorn said. Others buy insurance with a high deductible, prepping only for catastrophic events, he said.

“There’s a lot of details that have to be worked out … in general, we support 525 and 406,” Balhorn said.

He said at least Congress is talking about the problem and that there will probably be a lot of amendments made before some form becomes a law.

Compromise, he said, is the name of the game. “It’s worked for over 200 years,” he said.

But those who oppose the legislation include the American Diabetes Association and the American Cancer Society.

In an April press release, the American Diabetes Association said, “H.R. 525, the ‘Small Business Health Fairness Act,’ would allow new association health plans to circumvent state regulation and oversight, taking away coverage critical for diabetes patients’ ability to manage their disease.”

Kevin Dedner, Arkansas government relations director with the American Cancer Society in Little Rock, said if the proposal becomes law as is and with no amendments, it will allow insurers to skirt laws such as Arkansas’ Colorectal Cancer Act of 2005.

One provision of the act essentially requires insurance providers in the state to offer a wide range of colorectal cancer screenings options.

Dedner said the state looses about 630 people a year to colorectal cancer and that many of those deaths are preventable through proper screening.

According to research the ACS has done, there is a $6.4 billion a year in direct medical costs and $1.35 billion a year in loss of productivity costs associated with cancer, he said.

“Prevention and early detection are a good use of insurance dollars,” Dedner said.

Dedner stresses that this is a very important issue and not one the ACS has taken lightly. It’s not that the ACS opposes more people having access to insurance, just that they’ve determined the proposed law would be counter productive to their work.

“At the end of the day, we’re in the business of saving lives,” he said.

With AHPs, Dedner said, providers could choose to “cherry pick” healthy people and not cover the less-than-optimally healthy.

“That’s just a bad thing,” he said.

Lincoln Legislation

To heat up the debate a little, U.S. Sen. Blanche Lincoln, D-Ark., has proposed an alternative with her Small Employers Health Benefits Program Act of 2005 (SEHBP).

Originally introduced in the 108th Congress, it has been reintroduced in the current session and is starting to gain some attention, Lincoln said.

The Act, which is co-sponsored by U.S. Sen. Mark Pryor, D-Ark., seeks to improve upon proposed bills S. 406 and H.R. 525.

SEHBP, or S. 637, is based on the Federal Health Benefits Program (FHBP), which “offers members of Congress and government employees an array of private health insurance options,” according to information issued by Lincoln’s office.

Instead of allowing AHPs, S. 637 would have a national pool of participants that would cover small businesses and the self-employed.

Lincoln said she began working on SEHBP because everyone who came into her office lamented about health care in the country.

And when she was home in Arkansas, “everyone said, ‘I just want what you have,'” Lincoln said.

So the SEHBP is based on the federal government’s insurance benefits plan that will pool employees across the entire country, she said.

SEHBP would be administered by the Office of Personnel Management, the same entity that negotiates plans for federal employees, so the proposal doesn’t seek to “reinvent the wheel,” Lincoln said.

The federal program is fairly diverse, Lincoln said. She is covered by a Blue Cross & Blue Shield plan, but one of her staff who works in Virginia has a Maryland HMO plan, she said.

Theoritically with S. 637, everyone in the country who needed it would have access to the same lower costs and diversely competitive insurers.

According to information provided by Lincoln’s office, only 87 percent of Arkansas businesses with 100 to 200 employees offer health insurance.

But, 76 percent of businesses in Arkansas employ fewer than 50 people and only 29 percent of that subset offer health insurance.

Lincoln’s research also said that of working Arkansans aged 19 to 64, about 20 percent are not insured.

Lincoln’s office also claims that companies could save a significant amount of time, and in turn money, by not having to compare insurers or negotiate contracts.

S. 637 also has tax breaks designed as incentives to employers and designed to help employees who earn $25,000 a year or less, Lincoln said. The proposed S. 406 and H.R. 525 do not.

So far, Lincoln’s plan has received a warm welcome from Ark-ansans and has been endorsed by the American Medical Association, the Federation of American Hospitals and the American academy of Family Physicians.

Both Dedner and Balhorn said their associations aren’t yet behind S. 637, but not because they oppose it.

Both said it’s because the proposal is new enough, their respective associations haven’t had a chance to fully research the implications and weight all the options.

Lincoln said she hopes the proposal will get a review committee some time in the near future, then the bill might have a chance on the Senate floor.