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CONGRESS SHOULD MAKE IT EASIER for trade associations to offer self-funded and insured health care plans to their members.
That is an issue legislators are expected to debate when they return to Washington next month after the summer recess.
As we reported recently, the House of Representatives has passed patient protection legislation that includes a provision that would set new federal solvency and other standards for trade association health plans. In turn, so-called association health plans, or AHPs, would be exempt from essentially all state regulations, including mandated benefit laws.
Patient protection legislation the Senate is likely to consider now lacks comparable AHP provisions. As a result, the fate of AHPs will be decided -- assuming the Senate passes a patient protection measure -- by a congressional conference committee.
State regulators and some insurers are worried that creating a new type of regulatory system for association health plans might mean a return to the late 1970s, when the collapse of multiple employer trusts, a kind of predecessor to AHPs, mushroomed into a national scandal.
In brief, self-funded METs often were organized by shady insurance agents. The METs were essentially open to all. Low premiums were set to attract unsophisticated small employers or individuals, while high commissions and fees were paid to the agents.
States viewed METs as unauthorized insurance companies. But when states tried to shut down METs, the organizers claimed METs were employee benefit plans exempt from state regulation by the Employee Retirement Income Security Act.
By the time courts intervened, the METs had often collapsed, leaving policyholders with millions of dollars in unpaid claims. The scandal largely ended when Congress passed legislation in 1983 making clear that states had the authority to regulate and shut down METs.
In view of that tarnished past, the concern of state regulators about association plans is understandable.
But it would be unfair to compare the regulatory system and safeguards set by the House bill with the pre-1983 days.
Most significantly, AHPs could be established only by legitimate and established trade associations and controlled by them. That would, we think, prevent a resumption of the problem of outsiders setting up what really amounted to bogus trade groups.
Second, state regulators -- if they so chose -- would have complete authority to regulate and shut down AHPs that don't meet federal solvency and other standards.
In addition, AHPs would have to abide by a fairly rigorous set of federal solvency standards.
It may be necessary for legislators to add even more safeguards to ensure the solvency of AHPs.
But we think the approach the House has taken is a good one. Giving buyers another health care purchase option -- in this case through bona fide trade associations -- can only expand the number of people with coverage. That certainly is in the national interest.