Lobbying organizations representing small businesses are divided over association health plans (AHPs), and that amounts to a serious drawback in Washington, D.C., where it always pays to speak with one voice. AHPs would allow businesses with fewer than 200 employees to band together into purchasing consortiums. Two lobbying groups, the National Federation of Independent Business and the National Association for the Self-Employed, stand foursquare in favor. However, the National Small Business Association is against AHPs.
Legislation allowing AHPs has made it through the House before, but not the Senate. President Bush insists that AHPs would work by allowing small companies to skirt hundreds of state regulations and mandates currently in place.
The NSBA counters that AHPs would not so much create savings as segment risk by attracting healthier rather than sicker employees.
"The insurance industry competes based largely upon each company's ability to attract healthier participants," says the NSBA, which has about 150,000 members. "AHPs are likely to pattern that behavior and build insurance programs that are unattractive to older and sicker populations. This type of risk selection would lead to a drastically segmented market, with the healthy population gaining health care at a cheaper rate and the unhealthy population watching ... insurance premiums increase out of reach."
On the other hand, the National Federation of Independent Business, with 600,000 members, says AHPs would reduce the number of uninsured and provide affordable coverage.
The National Association for the Self-Employed, with 250,000 members, says that AHPs would lower insurance costs by introducing more competition into certain markets.
They would offer small businesses the same opportunity currently enjoyed by unions and large companies.
The NASE is urging its members to tell "your senators that you must have relief in the form of association health plans to be able to retain qualified workers and help grow the economy."