An association could establish both fully-insured and self-funded plans and determine what benefits it will offer, provided it does not exclude any specific disease. A plan would have to include at least 1,000 participants and beneficiaries to offer benefit options that are self-insured.

In addition, insurance agents would be authorized to market the Association Health Plan (AHP) to small employers if it offers at least one fully-insured benefit option. Moreover, agents and brokers would be able to assist an association with the creation of an AHP.

However, agent representatives say, certain changes in the language are necessary if AHPs are to be an effective means of expanding employer-provided health insurance coverage.

“With some modifications, the AHP provision could expand the availability of health insurance to employer groups,” said Joel Wood, senior vice president of government affairs for the Washington-based Council of Insurance Agents and Brokers.

In a bill that threatens to increase the cost of health insurance, Mr. Wood said, it is necessary to have offsetting provisions that will increase the availability of insurance. “We hope some minor adjustments will eliminate the problems that could undermine the intent of the AHP provision,” he said.

Maria Berthoud, vice president of federal affairs for the Alexandria, Va.-based Independent Insurance Agents of America, agreed. The two provisions at issue, she said, are non-discrimination rules and the extent to which state laws regulating health insurance are preempted as applied to AHPs.

“Unless changes are made in these provisions,” she said, “AHPs will not expand the availability of health insurance.”

She added that she hopes a House-Senate Conference Committee, which will develop a final patients rights bill, will make the necessary changes. The AHP provision does not appear in the patients rights bill approved by the Senate.

Specifically, under the AHP provision, a bona fide professional or trade association can sponsor a group health plan for its members. However, the provision contains non-discrimination language which bars an association from taking into account a specific members claims history when setting premiums. Thus, agents say, the association is treated as one employer which cannot charge different premiums to different members.

The problem, agents say, is that an AHP would have to have a very broad spread of risk to meet this non-discrimination requirement economically. The agent groups are asking the conference committee to consider an amendment that would bar an AHP from discriminating against an individual employee, but would allow the AHP to experience-rate a participating employer.

The preemption issue involves confusion in the legislation regarding the extent of state regulatory authority over AHPs. Agents say they are concerned that if the states retain authority to regulate AHPs, the plans would be subject to varying or inconsistent obligations in each state in which they offer benefits.

Because of what agents call “inarticulate drafting” of the AHP provision in the legislation, it is unclear whether states are preempted from regulating AHPs. Agents will ask the conference committee to amend the bill to clarify that federal law governs all aspects of AHPs, including what benefits must be offered.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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