Association Health Plan Bill in Senate Would Weaken Parity
In June, 2003, the U.S. House of Representatives passed Small Business Health Plan (AHP) legislation. A related Senate bill - S. 545 – the Small Business Health Fairness Act of 2003, is also potentially harmful.
Multi-employer Association Health Plans (AHPs) undermine existing state laws that require health plans to cover treatment for mental illness on the same terms and conditions as all other illnesses – commonly referred to as parity. HR 660 and S. 545 significantly expand the scope of a federal law (known as ERISA), that exempts self-insured employer health plans from state regulation. By expanding ERISA, HR 660 and S. 545 encourage employers that currently offer health plans for their workers (and their families) to switch away from coverage that meets a parity standard, i.e. plans that cover mental illnesses the same as all other illnesses.
The AHPs envisioned by HR 660 and S. 545 are exempt from all state insurance laws, including: state parity laws, minimum coverage standards for mental illness treatment and other consumer protections. The supporters of AHPs asserted that HR 660 and S. 545 would help make employer coverage more affordable and ease the growth among the uninsured. However, several recent studies have found that AHPs are not effective in reaching uninsured workers and their families and are more likely to fail as a result of insolvency.
Consequences of S. 545
In NAMI’s view, S. 545 would:
- severely undermine the effectiveness of the 34 state mental illness insurance parity laws,
- fail to address the problem of the uninsured – studies demonstrate that most employers that would switch to AHP coverage already provide coverage on their own, and
- place workers and their families at risk of losing coverage – studies show that AHPs have a long history of plan failures and insolvency (AHPs would not have to meet current solvency and reserve standards enforced by state insurance commissioners).
May 11, 2004