Lots of rhetoric in MA and across the nation about “association health plans” — allowing small businesses to band together to get lower rates from health insurers. President Bush regularly extols them as the answer for small business health insurance affordability. Sounds like a great idea. What’s the problem?
First, it’s a different issue in Washington DC and in Massachusetts.
Nationally, in most states, employers already have the right to band together in associations, as long as the associations comply with state consumer protection laws. There’s the rub. The national effort would allow employers to band together and evade all such regulations. Experience shows that when they do that, consumers get screwed by sleazy operators, with no government protection.
Another seemingly attractive “reform” promoted by national Republicans is to allow consumers to purchase health insurance in any state. Here’s a real life story — a Florida consumer (where such purchases are allowed) bought a cheapo plan in Mississippi. When the plan refused to pay promised benefits, the Florida insurance regulators said, “Sorry, we don’t regulate those guys.” When the consumer called the Mississippi insurance regulators, she was told, “Sorry, we only serve Mississippi consumers.” “What can I do?” asked the poor lady…”Move to Mississippi.”
In Massachusetts, it’s a different story. And a terrific new report by Nancy Turnbull and Bob Siefert, paid for by the MA Assn. of Health Plans, puts the MA AHP story in context. Prior to 1991, MA had a poorly regulated small group health insurance market that left consumers in the lurch whenever something bad happened to them, healthwise. In 1991, the state reformed that market offering good protections, and establishing a pretty big group of about 750,000 MA consumers and their employers. Initially, the law allowed employers to form their own associations. The association allowance led to real problems in the market, well outlined in the Turnbull/Siefert report.
In 1996, the state passed another law ending the association exclusion. For the past five years, small business associations that hope to market these new plans have been pushing to pass a new law re-allowing association health plans in MA. An odd coalition — including HCFA, the state AFL-CIO, Associated Industries, and the MA Association of Health Plans — opposes the proposal.
Nancy’s report is a great introduction to and overview of this issue you have heard about.