Families USA Calls for States To Regulate Association Health Plans

States should more closely regulate health insurance sold through associations to "curb sales abuses and deceptive practices," according to a report from Families USA scheduled to be released Thursday, the Wall Street Journal reports. With demand for individual health insurance policies increasing as a result of a decline in employer-sponsored coverage, many health insurers are "choosing to market [individual policies] through associations," which generally require people to join the group and pay dues to purchase a health policy, according to the Journal. Many states exempt health plans sold through associations from various regulations, including those regarding rates, assuming that the not-for-profit groups selling them "are looking out for their members," the Journal reports. However, while many associations "act in the best interests of their members in selecting a health insurer," some associations have "questionable ties to insurers" and might employ "unfair rating practices and misleading sales pitches," according to the Journal. The Families USA report says that many people who have purchased health insurance through associations have paid low rates at the time of their enrollment, only to experience a large increase in premium rates. Further, some policyholders have incurred large medical bills because the insurer and association "misrepresented coverage limits to make the sale," the Journal reports. Families USA is asking states to be more vigilant in policing such problems and to require associations to represent the interests of their members rather than that of the insurer offering the coverage. Families USA Executive Director Ron Pollack said, "Consumers feel the association is created to protect their own interests when in fact it was established to protect the interests of the insurance companies." But Merrill Matthews, director of the Council for Affordable Health Insurance, said that health plans sold through associations "provide access to affordable health policies in many states," adding that the companies selling such policies are examining their sales practices (Terhune, Wall Street Journal, 3/11).

The study is available online. Note: You must have Adobe Acrobat Reader to view the report.