Wall Street Journal
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.
Increased revenue and other benefits are already a hot topic among Republican-friendly business organizations, if not in the debate on Capitol Hill. “What’s in it for your association?” boomed consultant Don Dressler, at a meeting of trade-organization executives in Washington. “Membership retention and growth.” Seventy percent of businesses that recently joined one California-based trade association, he said, did so because the association offered its members health insurance.
Critics see little profit for the health-care system as a whole. They warn that pending legislation, which would allow the association health plans (AHPs) to escape burdensome state regulation in favor of lighter federal oversight, could lead to a proliferation of cheaper, bare-bones insurance policies that will draw a disproportionate number of healthier, younger workers. That, in turn, could increase financial burdens on more-comprehensive state-regulated plans by leaving them with an older, sicker and thus more expensive pool of covered workers.
But Republicans, under renewed attack from Democrats on the health-care issue, have adopted AHPs as a central part of their agenda for shrinking the ranks of the uninsured. The bill, which has cleared the House three times before, is expected to pass that chamber easily next month. And backers have hopes of improving prospects in the Senate, which hasn’t scheduled a floor vote on the matter previously.
Many trade associations currently offer members insurance, but usually they do so through policies that are sold to those within a single state. The AHP legislation would permit small businesses to band together across state lines and purchase policies through their association.
The bill specifically exempts such policies from state regulation; instead, they would operate under less onerous rules of the federal Labor Department. Because most states have a multitude of rules regarding coverage minimums, premiums and reimbursements, AHP insurance would be less expensive than the coverage currently available to small businesses. Proponents say this will reduce the number of uninsured Americans — which now exceeds 40 million people — by allowing small companies to find affordable insurance. Currently, small businesses are only half as likely as large ones to offer their workers health coverage.
The new policies likely would draw a flood of interest, says insurance-industry veteran Robert Laszewski. He estimates that a trade association the size of NFIB, which has 600,000 member businesses, could expect new revenue of more than $100 million annually if it got into the insurance business.
Dan Danner, chief lobbyist for NFIB, says the organization’s member surveys show that health-insurance costs recently have become the No. 1 concern of small-business owners, surpassing taxes and regulation. NFIB officials pledge that any profit from the policies will be returned to members in savings, not kept within the organization.
“Our intent would be to pass it all along to our members,” Mr. Danner says. “If that kind of money is out there, the big guys are making too much and our guys would be delighted to save it.”
Aides to President Bush, who got interested in the idea during the 2000 campaign, say the legislation contains safeguards against “cherry-picking” of healthy workers, and predicts many small businesses would offer ample coverage. “This plan would benefit average workers,” says Labor Secretary Elaine Chao, who has been traveling the country promoting the idea at NFIB forums. The proposed legislation would permit the plans to be offered only through well-established groups such as the NFIB, the Chamber of Commerce and the National Restaurant Association, which have been leading the charge for passage.
That’s a powerful lineup of Republican campaign allies. The NFIB, in particular, has emerged since the early 1990s as the most Republican-leaning of Washington trade groups. Of the $1.9 million the organization has provided in regulated “hard money” political donations since 2000, 97% has gone to Republicans, according to the Center for Responsive Politics, a nonpartisan campaign-watchdog group here. The organization’s network of small-business owners also has worked to help Republican candidates.
To be sure, the NFIB faces powerful opposition in trying to push the association health-plan legislation on Capitol Hill. The Blue Cross Blue Shield Association leads the coalition against the bill, joined by consumer and labor groups and state regulators, who stand to lose if the bill becomes law. Each side has formed coalitions that patch through constituents to the phone lines of lawmakers, hold receptions and put on seminars for Capitol Hill staffers.
One opponent in Congress, Democratic Sen. Edward Kennedy of Massachusetts, vows to filibuster the bill, arguing that it ultimately will increase costs and expand the number of uninsured. “This is special-interest legislation at its worst,” he complains.
But the NFIB sees its prospects in the Senate brightening. Two Democratic senators who earlier had fought the association health-plan idea, the late Paul Wellstone of Minnesota and Jean Carnahan of Missouri, have been replaced by Republicans allied with the small-business trade group.
Republican Sen. Jim Talent, who defeated Ms. Carnahan in November, actually worked as an NFIB lobbyist in 2001 between his earlier service in the House and his Senate campaign. “I ask my colleagues to just look at this practically,” Mr. Talent says. “There are millions of people who don’t have health care who could get it if we enact this legislation. You’ve got to have something better to offer before you oppose a bill that could do that much.”
