Tuesday, May 02, 2006

S. 1955 & NFIB

The National Federation of Independent Business has sold Republicans on a conservative answer to expanding health coverage: a new kind of insurance policy that trade associations could offer members.

What they don't emphasize is the significant benefits this could provide the NFIB, a major Republican Party benefactor. If the Bush administration and congressional leaders push association health plans into law, the NFIB could reap more than $100 million of annual revenue by selling policies, according to one estimate. The U.S. Chamber of Commerce is among dozens of business groups also considering getting in on the action.

Associations such as NFIB, Chambers and AARP are constantly looking for ways to generate more revenue. This is simply another potential source, and one that has been tried before.

In the mid 70’s the UCIT (United Chambers Insurance Trust) was heavily marketed to mostly small Chambers on a state by state basis. Originally a self funded trust, also known as a MEWA, the plan eventually faded away but the concept still remains. Some Chambers have paired with carriers to provide benefits to their members. Locally (Atlanta) two Chambers have paired with Blue to provide group benefits to their members. The product is the same one offered by Blue to any other merchant. The same underwriting standards apply. The only difference is there is a 5% discount in rates IF the writing agent remembers to complete the proper paper work.

Depending on which version of this legislation is passed, some folks would find their coverage is severely limited when compared to non-association benefit plans. Much of the savings in these plans comes from bypassing state mandates and stripping out legislated benefits.

Supposedly there will be more liberal underwriting in the AHP’s (association health plans). If this is the case, liberal underwriting combined with low price means those in poor health will abandon existing coverage and flock to these plans. Eventually the premiums will not support claim levels of the group. That means premiums must rise at a faster rate than would be expected in a more balanced portfolio.

These plans usually run their course in about 3 years and are either completely overhauled to more closely resemble non-association plans, or they simply cease to exist.
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