THE TREATMENT FEBRUARY 25, 2010
Republicans today are spending a lot of time talking up "Association Health Plans." This is not a new idea. Among other things, it was part of George W. Bush's 2000 presidential campaign platform, when I wrote about it. Here's what I said then:
Proponents of the Bush plan say Association Health Plans--under which a big trade group like the NFIB would offer insurance to its members--will allow small businesses to enjoy, at last, the same economies of scale and bargaining power as big companies. Indeed, John Emling, the federation's legislative director, estimates that Association Health Plans would provide insurance to more than four million of the uninsured. But, in most states, small businesses can already pool their resources and buy insurance, as long as they abide by the state insurance regulations passed during the '80s to avert the risk selection that made health insurance so unaffordable in the first place. Bush would exempt Association Health Plans from those state regulations. And that's the catch.
Some of the regulations require insurance plans to offer basic, minimum benefits, like mental health coverage, to all subscribers; others actually require insurance companies to use money from less expensive customers to help subsidize more expensive ones. Without these regulations, small businesses with healthy employees would indeed see their rates drop. But the rates for small businesses with less-healthy employees would go up. Many would either drop coverage altogether or offer insufficient benefits. Meanwhile, rates for individuals purchasing insurance on their own would rise even higher (further diminishing the impact of Bush's tax credit for individuals who buy insurance), since the premiums from small business currently help subsidize coverage for individuals, as well. When the Congressional Budget Office sized up the idea in January, it concluded that Association Health Plans would add just 330,000 people to the insurance rolls--while raising premiums by two percent for small businesses that couldn't participate in the plans.