Proposal
NRCA urges Congress to pass the Small Business Health Fairness Act of 2005 (H.R.
525/S. 406), legislation that would allow bona fide trade, business and professional
associations to provide quality, affordable health benefits through association
health plans (AHPs) to their respective small-business members nationwide.
Background
Nearly 46 million Americans lack health insurance, and approximately 60 percent
of the uninsured work for or reside in a family employed by a small business. The
problem for the uninsured and underinsured is largely one of small businesses not
having access to affordable health coverage because rising costs and stringent regulations
have placed it out of reach for many small-business owners. In the current regulatory
environment, small businesses do not achieve the same economies of scale, purchasing
clout and administrative efficiencies through health plans that currently are available
to Fortune 500 companies and labor unions. On average, small employers face premiums
that are 30 percent higher than those of large, self-insured companies.
For three decades, large- and medium-size multistate companies, as well as labor
unions, have been able to provide group health coverage across state lines for their
employees under the Employee Retirement Income Security Act (ERISA) of 1974. ERISA
plans, which are administered by the U.S. Department of Labor (DOL), have helped
them drive down health-care costs while providing universal coverage for their employees
and their families. Today, more than 115 million Americans are covered by ERISA
plans. Unfortunately, those in small businesses are not.
Policy benefits
In an effort to level the playing field for small businesses, NRCA urges Congress
to pass the Small Business Health Fairness Act of 2005. The following benefits would
be derived:
- More Americans insured: DOL estimates that passage of AHPs would result in
health insurance coverage for as many as 8.5 million uninsured Americans. By providing
small businesses the same purchasing power and federal regulatory structure enjoyed
by large employers and Taft-Hartley union plans, AHPs would offer small businesses
administrative efficiencies, larger economies of scale, greater bargaining power
with insurers and providers, and new and competitively priced coverage options.
- Consumer protection: AHPs would be registered as ERISA plans with DOL and
subject to sponsor-eligibility requirements, including financial and reporting criteria
that are more stringent than required of current ERISA plans. In addition, AHPs
could not discriminate against an employer member based on the health status of
employees, previous claims or risk associated with the employer's business. However,
costly state-mandated benefits would be superceded, thus enabling small businesses
to save an estimated 30 percent in overhead costs.
- Fiscal responsibility: AHPs would expand coverage through private market
mechanisms without new taxes or revenue outlays. With the return of federal budget
shortfalls, AHPs are the most responsible public policy option currently under consideration
to cover the working uninsured.
(July 2005)