If the federal bills pass, associations could form national AHPs that would be regulated by the U.S. Department of Labor.

The federal bills have won support from many business groups, including the National Federation of Independent Business, Nashville, Tenn.

Advocates say national AHPs would help small employers bargain for good deals and slash through government red tape.

National AHPs would “supersede the state-mandated benefits and community rating systems that have unfairly burdened small business,” Kathie Leonard, president of Auburn Manufacturing Inc., Mechanic Falls, Maine, testified in February at a hearing of the United States Senate Committee on Small Business Entrepreneurship.

Leonard supports AHP legislation because she maintains it would make it easier for the small employer to offer benefits.

But the opponents of the bills include the National Association of Health Underwriters, Arlington, Va.; the Blue Cross and Blue Shield Association, Chicago; and the National Association of Insurance Commissioners, Kansas City, Mo.

Many opponents attacked the national AHP bills in Atlanta in March, at the NAICs spring meeting.

Setting up a national AHP system “will have a devastating impact on the small group health market,” said Joan Gardner, executive director for state services at the Blue Cross and Blue Shield Association.

The Labor Department does not have the resources to regulate AHPs properly, and the federal government lacks the kinds of laws that the states have enacted to protect consumers and promote fair competition, Gardner added.

The NAIC sent letters to Congress in mid-March opposing both the House and the Senate AHP bills.

The NAIC argued that national AHP organizers would engage in “cherry-picking,” or efforts to insure only the healthiest industries, employers and individuals.

The national AHPs could also sidestep state benefit requirements, and some could end up with inadequate capital levels, the NAIC wrote.

Kansas Insurance Commissioner Sandy Praeger testified at the February small business committee hearing that several state AHPs have gone bankrupt because they were exempt from the kind of regulatory oversight imposed on other health plans.

Opposition to AHPs is so strong at the NAIC that NAIC members recently worried about the possibility that one state official might have inadvertently expressed ambivalence about AHPs at a congressional hearing, rather than emphasizing the NAICs complete disapproval of the concept.

Reproduced from National Underwriter Edition, April 7, 2003. Copyright 2003 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.