Association Health Plans

Some lawmakers have proposed helping small businesses by allowing them to pool together as “Association Health Plans” (AHPs) to buy or self-fund health care coverage. AHPs would enjoy special rules and exemptions from various state laws and regulations, such as benefit mandates.

NAIFA Health & Employee Benefits is committed to increasing small businesses' access to affordable health care coverage. Businesses with fewer than 50 employees are much less likely than large firms to provide health coverage for their employees. However; the creation of AHPs raises a number of concerns.

These initiatives will produce severe fragmentation of the health insurance market. They could adversely affect most insureds and agents serving the small group market. Exemption from state mandated benefit laws will allow AHPs to “cherry pick..” Lack of stringent solvency standards and state regulatory oversight may leave beneficiaries with an empty promise of coverage after incurring medical services because lack of regulatory oversight will allow fraudulent operators to flourish and even legitimate plans to become insolvent.

We only have to look back at the Multiple Employer Welfare Arrangement (MEWA) bankruptcy problems of the late 1980s and early 1990s that left hundreds of thousands of people with unpaid medical bills to understand the consequences of an unregulated purchasing pool. Unlike the individual states, the U.S. Department of Labor simply does not have the resources to monitor the more than 22,000 national associations and 48,000 regional, state, or local organizations potentially eligible to sponsor AHPs.