GAO Report Demonstrates Need for Association Health Plans, Lawmaker Says

Among insurance companies offering policies to small businesses, the five biggest firms represent 75% of the market in at least 19 states and 90% of the market in at least seven states, a General Accounting Office report has found, the AP/Las Vegas Sun reports. Sen. Kit Bond (R-Mo.) on April 30 said the findings show "disturbing concentration" in the small business insurance market and provide justification for a proposal to allow such employers to pool together to purchase health insurance for their employees. "You do not need to be an economist to understand that when competition in health insurance is anemic, those who need coverage the most are going to suffer from high costs and few choices," Bond, the ranking Republican on the Senate Small Business Committee, said. Association health plans, which are supported by President Bush, would be regulated under federal law, protecting participating employers from lawsuits filed by patients in state court. The AP/Sun reports that Bond, a former governor, was hesitant to support measures creating AHPs in the past because he feared the legislation would override state law, but he now feels that "when the need is so great, something has to be done." Critics, including some large insurers, say the plans will "destabilize the market and drive up premiums" for all consumers. But the National Federation of Independent Business praised the GAO report as a "smoking gun" that shows the "monopoly on small business policies" (AP/Las Vegas Sun, 4/30).