The nation's small businesses serve as the engine of our nation's economic growth,” says Michael Strauss, director of legislative communications at the NAHB. “But spiraling health care costs have hit small-business owners disproportionately hard.”
That's why the NAHB — along with numerous other organizations that count small businesses among their membership — is pushing for the passage of Senate bill S.545, which would pave the way for widespread establishment of association health plans (AHPs). Similar legislation has already passed the House.
AHPs “would allow small-business owners to band together across state lines through membership in a bona fide local, state, or national trade association to leverage their size, just as large businesses and unions do, to negotiate lower insurance costs and more options,” according to a NAHB press release. It is estimated that small businesses would save 15% to 30% with insurance through AHPs as opposed to purchasing directly from a carrier.
AHPs aren't anything new. In the 1990s, there were more than 1,000 such plans. However, that number has dwindled to fewer than 200 today, as state regulations have become more stringent and varied over the years, creating an administrative quagmire for inter-state AHPs. “Unless you're a large association that can take on the risk of self-insurance, you can't have one insurance plan across state lines,” says Jessie Brairton, manager of legislative affairs at the National Federation of Independent Business.
According to Brairton, the proposed legislation would establish a single set of guidelines for AHPs that would trump state regulations.
But even if the legislation, which has the endorsement of the Bush administration, does pass, there's still at least one obstacle to making widespread AHPs a reality.
Mark Kinsey, marketing director and partner at PKG Insurance Associates, says there is little to no incentive for a big insurance company to get involved with AHPs. “Why would they want to relax a standard that they know works at a profitable level?” Kinsey asks.
Brairton has an answer. Citing statistics that say more than 60% of the country's roughly 40 million uninsured work for a small business or are a dependent of a small-business employee, Brairton says, “I would think that [the insurance companies] would want to offer coverage to such a large group.”