Association health plans work | Don Brunell

In 1993, Gov. Mike Lowry (D) wanted to help small employers offer health insurance. Too many could not afford coverage for their employees and their families. His idea — which was a template for President and Mrs. Clinton’s national health reforms — was a government mandate requiring all employers to offer a plan with the same benefits for all workers. It didn’t work for three fundamental reasons.

Sometimes Plan B turns out to be better than Plan A. Case in point: our state’s association health plans.

In 1993, Gov. Mike Lowry (D) wanted to help small employers offer health insurance. Too many could not afford coverage for their employees and their families. 

His idea — which was a template for President and Mrs. Clinton’s national health reforms — was a government mandate requiring all employers to offer a plan with the same benefits for all workers. It didn’t work for three fundamental reasons.

First, the unions got the Democrat-controlled Legislature to exempt them from the new health care law because their existing plans had better benefits.

Second, the government-mandated employer health coverage was inferior to the coverage non-union employers were already providing.

And third, the 1993 reforms ran afoul of a federal law mandating that employees of multi-state companies be treated equally from one state to the next. 

When his first plan failed, Lowry went to Plan B. Ironically, Plan B turned out to be one of the great successes in employee health coverage.

In 1993 — as it is today — the key hurdle for small employers providing health coverage was cost. Lowry sat down with employers and asked what would help them provide affordable health coverage at their workplaces. The result was legislation that allowed employers to join together in associations to provide good health benefits for their employees at an affordable price.

Those plans are called Association Health Plans (AHPs).

Today, AHPs cover an estimated 500,000 people in Washington, nearly half of whom were previously uninsured because their employer could not afford coverage.

AHPs have been working and growing for nearly 20 years because they provide employers and working people with affordable, comprehensive health coverage, as well as service and support. Preserving association plans is even more critical these days because state and federal health reforms are projected to significantly increase health insurance premiums — as much as 50-70 percent in the individual market.

Association plans offer guaranteed issue and renewal, and comply with all state and federal laws. Nonetheless, they are in jeopardy because Insurance Commissioner Mike Kreidler insists on imposing restrictions far beyond those called for in the federal health reform law— even though the agency admits it has no authority to do so.

Ironically, in a fiscal note, Commissioner Kreidler acknowledged that association health plans are more affordable than other plans — but then argued against keeping them because the state will net less revenue in premium taxes. 

While elected officials in Olympia may like higher-priced plans because they net more premium taxes, employers, workers and their families want to keep their affordable health coverage.

Apparently the state needs more money because Washington’s Health Benefit Exchange is turning out to be very expensive.

State health exchanges were mandated under Obamacare to process subsidies and promote competition. But as state lawmakers struggle to find money for education, transportation and other vital programs, Washington’s Exchange board plans to ask the Legislature for at least $50 million per year to operate. What’s worse, the Exchange may well reduce choice, which benefits small employers and has proven beneficial in holding down insurance premiums.

Rather than eliminate AHPs because they don’t net as much premium tax revenue, we should keep them so small businesses can afford to grow and hire people. In the end, the state will net far more revenue that way.

Now is not the time to limit choice, drive up premium costs and destroy affordable coverage. Washington lawmakers need to ensure that health insurance is affordable, and that starts with preserving association health plans.

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