Families USA
February 22, 2000
New Patients' Bill of Rights Fact Sheets: Association Health Plans
What are Association Health Plans?
An Association Health Plan (AHP) is a program offering health plans to all members of the sponsoring association, which must have been in existence at least three years and which must exist for purposes other than providing health coverage.
How do they work?
AHPs must offer at least two plans to members of the association. At least one of the plans must be "fully insured" (purchased from an insurer). The other one can be (under certain circumstances) a plan in which the AHP "self-insures" (assumes the risks itself). The AHP will be exempt from state solvency laws but subject to new federal requirements.
What's wrong with AHPs?
- The plans that AHPs offer will be exempt from state laws that require the inclusion of certain benefits-such as mental health services or home health care-in every plan. Plans will be able to manipulate their benefit packages to attract healthier people and discourage sicker people from joining. This will drive up costs for employees who remain in the traditional insurance market outside the AHP because they need the broader benefits. It may also lead some employers to drop coverage.
- In states that have set limits on the variations in premiums, AHPs offer firms with a low-risk workforce (such as Certified Public Accountants) a way to opt out of the insurance pool and evade the higher premiums they would otherwise have to pay. This will drive up premiums for those small employers who are not able to participate in an AHP.
How many currently uninsured people would AHPs help?
The Congressional Budget Office estimates that a total of 330,000 out of the 44.3 million people who are uninsured will gain coverage through Association Health Plans and the related HealthMarts (see HealthMarts fact sheet).
Will AHPs cause higher premiums for people not in the AHPs?
Yes. The Congressional Budget Office estimates that 20 million people will see their premiums rise as a result of the creation of HealthMarts and Association Health Plans (AHPs). This result is expected because HealthMarts and AHPs are given the tools to design and market their plans to the healthiest people, leaving the sicker people alone in plans that will be forced to raise their premiums to cover higher per capita expenses.
