What Would Association Health Plans Mean for California?: Full Report

Publication Date: January 2004

Publisher: California HealthCare Foundation

Author(s): Karl Polzer; Mila Kofman

Research Area: Health

Type: Report

Coverage: California

Abstract:

Small businesses face special challenges in providing affordable health insurance to their employees. Faced with these challenges, business associations have long supported efforts to permit development of insurance products that reduce state regulations.

Federal legislation (S. 406) introduced in 2004 would have allowed business associations to offer licensed health insurance plans -- association health plans or AHPs -- that are exempt from state regulations such as guaranteed issue, guaranteed renewal, rating restrictions, and benefit mandates. Reflecting ongoing policy interest in association health plans, a more recent legislative proposal (S. 1955, Enzi) would have incorporated many of these same features.

According to two reports sponsored by CHCF, AHPs would leave less of the market under state supervision. The greatest impact would be on California's currently heavily regulated small-group market where AHPs would likely attract small businesses with healthy employees, lowering their rates. However, costs for small groups with sicker employees would likely increase. Additionally, AHPs would not result in a net reduction in the number of California's uninsured.

The issue brief What Would Association Health Plans Mean for California? summarizes a study that examined how the legislation now working its way through Congress might affect the California market. A companion report, The Effects of Introducing Federally Licensed Association Health Plans in California: A Quantitative Analysis, presents the results of a simulation that gauges the potential impact in detail. Both of these, plus the full report on study, are available fow download as PDF files below.