. . . BUT CREATE ADVERSE SELECTION

To the editor: Your Aug. 17 editorial supporting association health plans fails to address how these plans threaten to divide and destroy the small-group marketplace.

AHPs, as your editorial correctly notes, would be exempt from state-mandated benefit laws. Therefore, healthier groups offering fewer benefits would have a strong incentive to bypass state-regulated small-group insurance in favor of less expensive, less inclusive AHP coverage.

As a result, the pool of people in state-regulated small-group insurance would be smaller and less healthy than people in AHPs. This, in turn, would necessitate higher premiums, causing many small groups to drop their coverage.

Small business should continue to be able to band together to achieve economies of scale and to purchase coverage through state-regulated cooperatives. AHPs, on the other hand, would raise costs for less-healthy employees of small businesses and add thousands more people to the ranks of the uninsured.

Bill Gradison

President

Health Insurance Assn. of America

Washington