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Today, Republican Senate candidate Kelly Ayotte supports the idea of small business association health plans, which would allow small businesses to pool together to buy health insurance as a group. But in 2006, Ayotte signed a letter opposing legislation that would create the same type of associations.
That letter to U.S. senators was signed by 41 state attorneys general, including Ayotte. The letter argues that allowing associations of small businesses to pool together to buy health insurance would harm consumers. By creating a structure that would supersede state laws, small business health plans would allow insurers to ignore state mandates in favor of "bare bones plans, subjecting consumers to reduced care and ever increasing out-of-pocket expenses," the letter warned.
Ayotte spokesman Brooks Kochvar acknowledged yesterday that Ayotte had changed her mind.
"With insurance costs increasing since she signed the letter and small businesses having difficulty purchasing health insurance for employees, she reassessed her position and thinks you should allow them to pool together and purchase insurance in a way that protects consumers," Kochvar said.
On the campaign trail, Ayotte and another Senate candidate, Democratic U.S. Rep. Paul Hodes, have sparred over health care reform. Hodes supports the Democratic-sponsored reform bill being debated by Congress. Ayotte supports ideas that have been part of the Republican proposals.
In an appearance in August, Ayotte said, "We need portability, the ability to come together as state businesses, across state lines, to increase our insurance pools so we can get better rates."
Kochvar said yesterday that a lot has changed in the last three years, since Ayotte signed the letter. "Health care costs continue to increase drastically," Kochvar said. "Small businesses are struggling more and more to provide their employees with insurance."
Kochvar said Ayotte believes insurance pools will reduce the costs for families by allowing small businesses to negotiate lower prices. Asked whether Ayotte was still worried that associations would preempt state mandates, Kochvar said, "It has to be done in a way that protects consumers and ensures they receive the best health care possible." He added that government should look at state policies to see what has worked and "incorporate the successes in federal legislation."
According to a federal government survey, the average annual health insurance premium for a single person increased from $4,622 to $5,247 between 2006 and 2008. Family plan premiums grew from $12,686 to $13,592.
The bill Ayotte opposed in 2006 was sponsored by Sen. Mike Enzi, a Wyoming Republican. It would have created new health plans sponsored by trade, industry or professional associations or chambers of commerce. The associations would buy insurance from an established insurer. (Larger associations could self-insure.) Employers who are members of the association could then buy insurance through the association.
The insurance would need to be bought through an insurer in the association's home state, but employers in other states could be covered by the plans. The plans would be subject to federal regulation, but any state laws would be preempted. For example, if New Hampshire requires that insurance plans cover gastric bypass surgery, a realty company in New Hampshire could buy a plan through a national Realtors association based in Washington that did not cover gastric bypass surgery, as long as the plan met federal standards. Large businesses and trade unions already offer plans that are regulated by federal, not state, standards through a 1974 law referred to as ERISA.
Similar proposals came before Congress in 2005 and 2008, with the last bill co-sponsored by former New Hampshire Republican senator John Sununu. Republicans have again proposed similar ideas in the current health care reform debate.
The argument in favor of small business plans is that they will increase competition among insurers and will allow small businesses to lower costs by joining a larger risk pool. Medical groups such as the American Cancer Society opposed the 2006 bill, saying it would undermine state laws that require certain coverage.
The 2006 letter signed by Ayotte and the attorneys general, and sent by the National Association of Attorneys General, opposed the bill because of its effect on states.
"This bill contains provisions that will erode state oversight of health insurance plans and eliminate consumer protections in the areas of mandated benefits and internal grievance procedures," the attorneys general wrote.
The letter argued that the federal law would preempt state laws relating to "mandated benefits, internal appeals, form and rate filing, market conduct review and prompt payment of claims" by allowing the small business health plans to be sold in states where the plan does not meet state standards. They warned that benefits mandated by state law include things such as mammograms, routine gynecological care, child wellness services and diabetes equipment.
"Allowing health insurers to abandon mandated benefits, many of which are preventative and/or diagnostic, will result in an increasingly ill population and higher health care costs," they wrote. "Elimination of strong state protections in exchange for weak federal oversight fails consumers."
The 2006 bill failed by five votes in the Senate after a Democratic filibuster. (Sununu and Sen. Judd Gregg, both Republicans, voted for it.)
Charlie Arlinghaus, president of the Josiah Bartlett Center for Public Policy, said the concept of small business associations has not changed over the years. He said state regulators are likely to be as unhappy today as they had been in the past. But Arlinghaus said the one thing that has changed is a large group of people who used to want to preserve the status quo on health care.
"Now, I think everyone on the right and left thinks we have to change something," he said.
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Tuesday, January 19, 2010 at 08:34AM