Association Health Plans Would Raise Coverage Costs

Feb 16, 2000

FOR IMMEDIATE RELEASE

CONTACT: Richard Coorsh

February 16, 2000

(202) 824-1787

e-mail: rcoorsh@hiaa.org

The following statement was released today by Chip Kahn, President of the Health Insurance Association of America (HIAA):

Association Health Plans ("AHPs") – alternately known as multiple employer welfare arrangements ("MEWAs") – are being touted as a way that smaller businesses can unite to purchase lower-priced health coverage. Unfortunately, AHPs would do more harm than good.

AHPs – unlike state-regulated small group health insurance plans – would be able to preempt state mandated benefit requirements. Consequently, AHPs would fragment the small group health insurance market, taking with them consumers likely to have lower health care costs. As a result, small businesses and their employees who stay with their small group coverage would experience premium increases, which in turn could compel many of them to drop their coverage.

HIAA is well aware that some small businesses have difficulty affording health coverage. Our InsureUSA program addresses this concern by calling for a host of reforms, including tax enhancements to make the cost of coverage more affordable for small businesses. AHPs, on the other hand, only would raise the number of uninsured Americans.

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