House Passes Small Business Health Fairness Act

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The U.S. House of Representatives passed the Small Business Health Fairness Act on Tuesday, July 26, legislation that would permit small businesses to join together across state lines to purchase health insurance for their workers through Association Health Plans (AHPs). The bill allows small businesses to purchase healthcare through trade associations and professional organizations.

Elaine Chao, Secretary of Labor, in a statement released on Tuesday said “President Bush and I applaud the House of Representatives for passing legislation today to improve access to quality health benefits for millions of American workers and their families.”

Ms. Chao praised the bill's provision for AHPs saying, “By allowing small businesses to join together to purchase health benefits through trade and professional organizations, AHPs will help small businesses gain the negotiating leverage currently enjoyed by big businesses and labor unions. AHPs level the playing field for small business workers and their families, who comprise the majority of the uninsured.”

National Federation of Independent Business executive vice president, Dan Danner, agreed in a statement released Tuesday. Danner said that the high cost of health insurance to small businesses was the main reason many do not offer health insurance. He hailed the legislation as a “step toward quality, affordable health care for small business.”

While acknowledging the need of small businesses for affordable health coverage, Mary Nell Lehnhard, senior vice president, Blue Cross and Blue Shield Association (BCBSA), criticized the legislation for exempting AHPs from state laws and consumer protections. Ms. Lehnhard said in a BCBSA statement that the “House-approved legislation would eliminate existing basic limits on how much or how often premiums can be increased and assurances that critical health services are covered.” Ms. Lehnhard further cited a report by Mila Kofman entitled “Association Health Plans: Loss of State Oversight Means Regulatory Vacuum and More Fraud”, published by the Georgetown University Health Institute, that criticizes the legislation.

Labor Secretary Chao pointed to strong oversight provisions in the legislation in her statement. She added, “The Department of Labor already oversees the health benefits of 135 million Americans, including 78 million Americans in plans solely regulated by the department. We will ensure that workers in AHPs have secure health benefits.”
Democrats in the House who opposed the legislation, according to a Reuters report, argued that AHP plans would be able to choose relatively young and healthy workers, and exclude older, sicker ones, who would then face even higher insurance premiums from other providers.

The House version of the Small Business Health Fairness Act has passed several times, according to the Reuters report, but while support in the Senate is growing, the Senate Bill is not expected to gain approval in its current form.

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