Association Health Plan Proposal in Congress Would Create Regulatory Loopholes, Could Hurt Consumers, Study Says

Congressional proposals that would exempt association health plans -- in which small businesses pool together to purchase health insurance for their employees -- from state regulation would create "regulatory loopholes" that could lead to "a new rash of health insurance scandals," according to a study released May 8 by the Blue Cross and Blue Shield Association of America, CongressDaily reports (Rovner, Congress Daily, 5/8). The report found that the legislation would replace state consumer protection laws, financial solvency standards and small employer health insurance reforms with "minimal" federal standards. It also concluded that federalizing AHPs would give the Department of Labor limited authority to certify AHPs, creating a "regulatory vacuum." The Labor Department does not have the "capacity to replicate the functions of state insurance departments," the report stated (BCBSA "Key Findings," 5/8). Study author Eleanor Hill said AHPs would largely be regulated on "the honor system," with health plans expected to report problems found by auditors "they hire themselves" (CongressDaily, 5/8). Mary Lehnhard, senior vice president of BCBSA Office of Policy and Representation, said, "It is abundantly clear that exempting AHPs from state law is not the magic bullet to eliminate the struggles of small employers facing rising health care costs," adding, "[T]here is clearly mounting evidence to show that the proposed AHP legislation is not in the best interest of consumers or small businesses" (BCBSA release, 5/8). The report is available online. Note: You will need Adobe Acrobat Reader to view the report.