Sen. Enzi Speaks About Legislation on Association Health Plans

WASHINGTON, April 13 -- Sen. Michael B. Enzi, R-Wyoming, issued the following statement, which was published in the Congressional Record on April 11, on legislation (S. 1170) to amend the Employee Retirement Income Security Act of 1974 to establish additional criteria for determining when employers may join together in a group or association of employers that will be treated as an employer under section 3(5) of such Act for purposes of sponsoring a group health plan:

I rise to introduce the Association Health Plans Act of 2019. I have been championing association health plans, which I sometimes call small business health plans, for more than 15 years. As a small business owner, I understand firsthand the difficulties these employers face trying to provide health insurance for their employees. Small business owners want to provide comprehensive health insurance to their employees, but it can be a real struggle to afford those plans. In part due to these pressures, the number of small businesses offering coverage has dropped substantially over the years, from 47 percent in 2000 to 30 percent in 2017.

Few families are shielded from the rising costs of healthcare and, by extension, the rising cost of health insurance, but among the hardest hit are American small businesses.

Small businesses have limited ability to pool risk and lack coverage in the market, so they often end up paying more for health insurance than large employers who have more buying power. According to the National Conference of State Legislatures, small businesses pay about 8 to 18 percent more on average than large businesses for the same health insurance policy.

To put it another way, one family shoe store probably can't get an insurance company to play ball, but 1,000 family shoe stores probably could. This is the premise of the association health plans. Let's let small businesses band together and leverage their shared power in numbers to obtain comprehensive and affordable health insurance as though they were a single large employer.

This does not mean they are allowed to cut corners. The coverage offered to association members is subject to the consumer protection requirements that apply to large employers. That includes important consumer protections established on a bipartisan basis under the Employee Retirement Income Security Act, ERISA, the Health Insurance Portability and Accountability Act, HIPAA, and the Consolidated Omnibus Budget Reconciliation Act, COBRA. Association health plans also comply with the Affordable Care Act requirements for large-employer health plans.

Association health plans are not a new concept. They have long been permitted under Federal law. For example, the Wyoming Chambers Health Benefit Plan has served Wyoming's Chambers of Commerce since 2007. It currently offers comprehensive and affordable coverage to 11 local Chambers of Commerce, 52 employers, and 255 employees.

Last year, the Trump administration issued a new rule that made it easier for small businesses to band together for the purposes of offering an association health plan. Specifically, the Department of Labor created a new "pathway" for forming the association so that small businesses can band together by common industry or common geography. For example, flower shops across the Nation might band together to offer an association health plan, or small businesses in unrelated professions might band together just within my State of Wyoming.

The final rule also allowed self-employed Americans to receive coverage through association health plans established under the new pathway. It did not rescind the old pathway, so association health plans in existence before the final rule can continue to operate unchanged, or new ones can use that pathway to form.

The final rule also does not change existing ERISA preemption rules that authorize broad State insurance regulation of association health plans either through health insurance issuers or directly in the case of self-insured association health plans. I will repeat that again. The final rule does not change existing ERISA preemption rules that authorize broad State insurance regulation of association health plans either through health insurance issuers or directly in the case of self-insured association health plans.

Roughly 30 association health plans have formed under the new pathway since the Department of Labor finalized the rule. For example, the Las Vegas Chamber of Commerce formed an association health plan covering 500 small businesses and 100 sole proprietors. The Georgia Chamber of Commerce began taking steps to launch a new self-insured association health plan that could eventually enroll 800,000 people. Two Michigan small business associations joined forces to create an association health plan that has enrolled nearly 400 small businesses throughout the State.

There are likely more to come. According to the Congressional Budget Office, about 4 million people are expected to enroll in association health plans by 2023, including 400,000 who would otherwise be uninsured.

All of this is to demonstrate one simple fact: Association health plans work. They provide coverage to people who would not otherwise have it, and they provide comprehensive health benefits at an affordable price.

Unfortunately, a Federal district judge vacated the Labor Department's final rule, threatening to disrupt coverage for tens of thousands of enrollees in association health plans formed under the final rule and threatening to restrict the ability of small businesses, working families, and self-employed Americans to band together to obtain affordable and high-quality health insurance in the future.

My bill will simply codify the Labor Department's final rule to provide certainty for current enrollees and to ensure the pathway remains available for new association health plans to form. It is not intended to disrupt the State authority. That is important so we don't need to build another Washington bureaucracy, and you can be assured of better help if you need it. Our State insurance commissioners are much closer to the real problems confronted by insurance consumers and are better able to deal with those issues at a local level. It is also not intended to affect association health plans created by other means than the pathway established in the final rule.

There has been a lot of discussion in the Senate lately about protections for people with preexisting conditions. I support protecting people with preexisting conditions. Every Republican Senator I know does too. It is important to point out that robust coverage doesn't mean very much if you can't afford to buy it. Unfortunately, that has been the experience for a lot of small business owners and self-employed Americans in my State. Association health plans can help solve this problem for small businesses. The Labor Department's final rule didn't just expand eligibility for a type of health insurance that has long been available for some small business owners in the United States. It made the promise of comprehensive and affordable health insurance coverage a reality for the same Americans who have identified the cost of health insurance as the No. 1 problem facing small businesses for the last 30 years.

This is not to say there is not more that can be done. The final rule is an important step forward, but it is not a silver bullet. There is more Congress can do to advance association health plans, and there is more Congress can do to improve our healthcare system and address the issues of rising healthcare costs and rising drug prices, all while ensuring protections for people with preexisting conditions, but one thing we can do immediately to help people with preexisting conditions is to pass the bill I am introducing today. The district court judge struck down the Labor Department's final rule and did not issue a stay, so thousands of currently covered individuals are at risk of losing their health insurance coverage. Passing this bill will ensure that they do not.

Small businesses ought to have the opportunity to band together and leverage their combined strength so they can negotiate and provide their employees with comprehensive and affordable health insurance coverage. That coverage should be subject to the same consumer protection requirements that apply to large employers offering similar coverage. Small businesses and their employees are the bedrock of our country's economy, and proper health insurance coverage is a key element of family well-being and peace of mind. This bill will strengthen those foundations so we can continue to prosper as a country.

TARGETED NEWS SERVICE, Harwood Place, Springfield, Virginia, USA: Myron Struck, editor; 703/304-1897; editor@targetednews.com; https://targetednews.com