Bills offered in response to rising insurance costs

Washington -- The House of Representatives recently acted on two pieces of legislation that have the potential to significantly change how health insurance is bought and sold in the small-group and individual markets.

With rising health care costs putting increasing pressure on lawmakers to pass some type of reform this year, the House before the August recess passed a measure that would allow association health plans to circumvent state regulation in favor of federal rules that currently apply only to self-funded health insurance plans generally offered by large employers.

And with election-year politics already setting in, the AHP legislation might have a better chance of passing in the Senate than it has had in years, experts said. The measure also is high on the White House's list of health care priorities.

The bill's supporters argue that by releasing AHPs from state mandate burdens, national associations could offer their members more affordable health insurance options. Under the measure, small businesses could band together, giving them negotiating power similar to that of large companies, said the bill's sponsor, Rep. Sam Johnson (R, Texas).

"It's time to increase the insured and give small business the same access to affordable health care that big business already enjoys," he said.

But the bill's opponents argue that, at best, federally regulated association health plans will segment the market. At worst, they say, it will further enable insurance scams that already fleece small businesses out of millions of dollars a year.

While physicians' organizations generally have chosen not to speak on association health plan legislation, the American College of Physicians recently came out with a white paper in which the internal medicine society concluded that AHPs' "potential benefit -- to lower the cost of coverage for a small number of healthy people -- does not outweigh the possibility that this proposal could disrupt the small group health insurance market, increase premiums for those who remain in traditional policies and ultimately increase the number of underinsured and uninsured."

Giving consumers new buying powers

Also in July, the House Energy and Commerce committee voted to approve a bill that would let people shop for health plans sold outside their own states.

Proponents argue that the measure would spur market competition and provide more affordable options.

"High cost is the leading reason the uninsured lack health insurance. By letting people buy insurance that meets their needs, we can lower costs and reduce the number of uninsured," said lead sponsor, Rep. John Shadegg, (R, Ariz.).

By making insurance products sold in states with fewer mandates available, the bill would allow people to buy plans that better suit their needs, according to the Arizona-based Assn. of American Physicians and Surgeons, which supports measure.

"Guaranteed issue, community rating and increased mandated benefits have had chilling effects on the individual and small-group markets in many states. The AAPS is convinced that these politically motivated regulations have served the market poorly by needlessly increasing the cost of health insurance premiums," Jane Orient, MD, executive director of the association, wrote to Shadegg.

But the measure raises similar concerns to the AHP bill, including the potential to make health insurance more affordable for some people and more expensive for others, said Paul Fronstin, PhD, senior research associate with the Employee Benefit Research Institute, which conducts research on benefit plans.

Also, the bill doesn't address how regulators in one state will be able to help consumers who are buying health insurance in another state, said Mila Kofman, an assistant research professor at Georgetown University's Health Policy Institute.

Neither reform addresses the real problem, she said. "This is just a diversion from a real discussion about the cost of health care," Kofman said.

Despite rising health care costs, so far, Congress seems to be focusing on incremental reforms designed to reduce the cost of health insurance for working Americans, experts said.

"You will continue to see approaches designed to increase affordability," Dr. Fronstin said. "I don't think you will see proposals that increase regulation in this administration."