Following passage last week in the Senate Health, Education, Labor and Pensions Committee of the Healthcare Market Modernization and Affordability Act Of 2006 (S. 1955), the PIA National Regulatory Affairs Committee (RAC) unanimously passed a motion recommending that the Federal Affairs Committee (FAC) monitor the progress of the legislation.

The bill, which would authorize Association Health Plans (AHP), is strongly opposed by many insurance groups because it actively undermines the principle of state regulation of insurance. PIA strongly supports state regulation of insurance and strongly opposes federalization.

Touted by supporters as a means of making health insurance more affordable, the bill would sweep aside state laws and allow insurers operating in the small-group market to offer lower-cost plans that may exclude certain state benefit mandates, as long as they also offered a comprehensive plan option.

The National Association of Insurance Commissioners (NAIC), the National Conference of Insurance Legislators (NCOIL), the Health Insurance Association of America (HIAA), various Blue Cross/Blue Shield associations and consumer groups are all opposed to AHPs, noting they could lead to the “cherry picking” of healthier small groups, while making insurance for less-healthy small groups more expensive and more difficult to obtain, creating a “race to the bottom” leaving consumers inadequately insured.

The PIA RAC recommendation includes making specific policy suggestions, such as reforming the original ERISA Act and improving provisions in the AHP plan that diminish states’ abilities to protect consumers and put state collection of premium taxes at risk. 

NCOIL Warns Capitol Hill – Enzi Bill May Have Unintended Consequences (PDF file, 3/7/06)

NAIC – AHPs Are Bad for Consumers (PDF file, NAIC Alert)

March 21, 2006