BY ROBERT P. MADER of CONTRACTOR’s staff
WASHINGTON — About 150 plumbing-heating-cooling contractors went to Capitol Hill in late March to ask members of Congress to pass legislation allowing association health plans. Senate Bill 545, the Small Business Health Fairness Act of 2003, was the focal point of the Plumbing-Heating-Cooling Contractors - National Association Legislative Conference here.
The bill would allow trade associations, such as PHCC-NA, to set up their own group health insurance programs. Trade associations would be under no obligation to establish health insurance programs, and their members could choose whether to join.
The contractors, mostly active contributors to PHCC-NA’s political action committee, were briefed March 24 about the contents of the bill and some of objections used by its opponents.
Before the contractors began calling on congressional staffers, Sen. Jim Talent, R-Mo., opened a morning breakfast March 25 by saying the legislation has gone further in Congress this year than it’s ever gone before. The bill passed the House last year through the efforts of House Speaker Dennis Hastert, R-Ill. Talent said he is not sure if the Senate will pass the bill this year, even though President Bush said in his State of the Union address that he favors the legislation.
Talent explained that AHPs would be “sort of like a small business health plan co-op” that would give small business owners access to the type of programs now available to larger businesses. He said the main opposition to AHPs comes from Blue Cross/Blue Shield, which sees the program as competition. The opposition could indicate that Blue Cross/Blue Shield thinks AHPs would succeed, he added.
Talent also noted that a few members of Congress opposed AHPs ideologically. Some on the right think health insurance should be a completely free-market item, similar to car insurance. Some on the left are in favor of national health care.
Following the breakfast, the contractors fanned out through the congressional office buildings, meeting with staffers through appointments made by the PHCC staff, who made about 2,000 phone calls to House and Senate offices.
During the lobbying visits, Paul Buddy, president of Cannonball Mechanical in Aurora, Ill., told staffers working for Hastert, Sen. Peter Fitzgerald, R-Ill., and Sen. Richard Durbin, D-Ill., that while his union employees have good coverage, he’s paying tens of thousands of dollars on health insurance for himself, his wife and his office staff.
The Small Business Health Fairness Act of 2003 would allow small business owners to band together through their associations across state lines to purchase group health insurance. In effect, it would allow members of an association to create the same type of group health plan as a Fortune 500 corporation or a labor union.
The AHP law would give contractors more choices. A contractor might belong to more than one association, such as PHCC and the National Federation of Independent Business, and have a choice of more than one plan.
The bill would require that associations offering plans to have been in existence for at least three years for some other substantial business purpose other than providing health insurance.
Such a health plan could be either fully insured or self-insured. If an association self- insures, the plan would be required to maintain surplus reserves of $500,000 to $2 million, depending upon the level of stop-loss coverage.
An association plan would have to have at least 1,000 participants, and it would be required to take every member of the association — opponents incorrectly claim that associations could cherry-pick participants. The legislation also prohibits associations from charging any member higher premiums based on health status or prior claims experience.
A board of trustees would operate a plan.
AHP proponents say that contractors will save money through reduced premiums. The Congressional Budget Office has estimated that small businesses will see their premiums decline by 13% to 25%, PHCC reported, with the largest savings experienced by the smallest firms. A January 2003 Small Business Administration study showed that administrative expenses for insurers of small health plans made up 33% to 37% of claims, compared with 5% to 11% of claims for large company self-insurance plans.
If health insurance is more affordable, it is hoped that more employers will offer it to their employees. PHCC has cited independent research that says as many as 8.5 million workers who do not have health insurance would receive coverage.
Best of all, Lake Coulson, PHCC director of government relations, told the contractors, association health plans are free to the U.S. taxpayers.