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Association Health Plans Bill Shortchanges Working Americans

Thursday, May 13, 2004

Association Health Plans Bill Shortchanges Working Americans
HR 4281 Not a Solution to the Problem of Uninsured

(WASHINGTON, D.C.) – The expected passage today of H.R. 4281, which would allow small businesses to join together to purchase health insurance, is not a solution to the uninsured problem because these plans would be exempt from important consumer protection requirements and would likely give consumers only skimpy health coverage, Consumers Union said.
“The House passed the same bill last June. It was a bad idea then, and it’s a bad idea now,” said Ami Gadhia, assistant legislative counsel with Consumers Union, publisher of Consumer Reports. “In passing this legislation, the House neglected to give small business employees coverage that won’t fail them when they need it most.”
H.R. 4281 will allow for the creation of association health plans (AHPs) that are not required to provide consumers with the benefits mandated by their states – such as mammography screening, cervical cancer screening or well-child care.
AHPs also will be exempt from state insurance regulations requiring healthcare plans to maintain reserves to pay claims and to market their plans fairly. In addition, it is anticipated the plans will “cherry-pick” healthy individuals out of existing insurance pools because they will offer cheaper, less comprehensive benefits that suffice for the healthy.
“This cherry-picking of healthy consumers by these plans will undermine state insurance reform efforts designed to spread costs broadly and make coverage more affordable to high-risk people,” Gadhia said. “Rates will go up for sicker individuals, and healthier people will get only bare-bones coverage with this type of legislation.”

Ami Gadhia, (202) 462-6262