MN-02 : Should Kline Blame Bush, Coleman or himself for AHP Failure ?

As the ranking minority member of the House Education and Labor Committee, John Kline had his moment to address the President and other leaders on the solution for Health Care Reform. His recommendation was Association Health Plans (AHPs) for small business owners.

Couple of questions :
1.) What are AHPs and if it’s such a good idea, why hasn’t it been enacted ?
2.) Will it resolve the questions of pre-existing conditions, will it make basic coverage affordable, will it be transferable with employment and will it result in universal participation ?

To the first question. AHPs have existed for decades, both multi-state and intra-state. AHPs would allow for businesses to band together through associations to increase their buying power when negotiating with insurance providers for coverage. By forming AHPs, associations could provide their members with more health insurance options, which in theory would drive down the cost for small business owners and their employees. However because of individual states being able to define what needs to be provided (in other words, mandates), they have declined in use. For example using 2008 data, only eight states mandated that oral surgeries had to be covered in a health insurance policy while 50 states want mammograms covered.

There was some legislation offered during the Clinton years, but it was never passed by both chambers. When Bush became president, it stayed dormant until 2003 when the House with John Kline’s support passed HR 660. The bill would authorize the formation and multi-state operation of federally-certified Association Health Plans. AHPs would be regulated under a single set of federally prescribed rules, and permitted exemptions from costly state regulations that large corporate and union health plans already enjoy under the Employee Retirement Income Security Act. The Senate failed to act … so is Norm Coleman to be blamed? Or President Bush for not pressing harder ? Today, the legislation is HR2607 Small Business Health Fairness Act of 2009 and is awaiting action in the House. Today’s legislation is different than the Bush-era legislation – then the proposal included a federally prescribed rules, but now the current legislation would not have to meet any government-mandated, minimum benefit requirements -- associations would be able to determine which benefits they are willing to pay for.

So why hasn’t it been passed ?
One reason, could be a question of states rights. For example, should Minnesota decide what’s best for Minnesotans or should the Federal Government. AHPs would only have to obtain plan approval in the original state in which it filed. (It also would have to comply with the original state's laws mandating coverage of certain diseases and then all other states would be obligated to accept that approved plan.) This is the same problems that exist if insurance companies are allowed to sell insurance across state lines … insurance companies could seek out the state with the most favorable mandates and make that its complying state … unsuspecting or unknowledgeable purchasers may not find out the limitations of the policy until there is a claim.
Second, the potential impact to the Federal Budget. Although the current legislation has not been reviewed by the Congressional Budget Office, HR 660 was. For a ten year period, it was estimated to cost the government $280 million dollars. Overall it would impact 600,000 people while the CBO also estimates that about 10,000 people would lose coverage in response to rising premiums in the small-group market.
Overall, not much of an impact.

Now, to the second question regarding the real healthcare questions … pre-existing conditions, affordable coverage, transferable with employment and universal participation ? Not much help here.

Kline has offered a solution, that is really a poor choice. Kline has himself to blame since this legislation could have been enacted when Republicans were in control of Congress and the White House. Instead, healthcare expenses continue to escalate, coverage reduced and is now at a crisis stage.

Kline wants Association Health Plans while the Democrats favor Democrats government-based "exchanges" in which small companies can pool together. The House passed a bill that included a federal exchange, while the Senate bill would set up state-based exchanges. Insurers offering plans in the exchanges would have to offer a package meeting minimum standards.

The difference was simply stated in an exchange between Kline and Rob Andrews (D-NJ) concerning who determines when a woman is released from the hospital after a caesarian section. Kline wants the insurance company to decide … Andrews wants the doctor.

Kline's plan has been dormant for good reasons ... exchanges offer a better prospect for America.