The National Assn. of REALTORS® has revved up its spin machine with a call to rally around Washington's proposed Association Health Plans (AHPs):
"Nearly one-third of NAR's members do not have [health care] coverage. If covered, many find it very costly. Congress is considering legislation that would expand the availability of health coverage for the self-employed and employees in small businesses through their associations. We are leading that fight on Capitol Hill.
"Association Health Plans (AHPs) would allow the self-employed and small businesses the same accessibility, affordability, and choice in the health care marketplace that big businesses and unions now experience. AHPs would allow associations and their members, like REALTORS®, to join together across the country (we can't do that now) to get the best possible health policy rates for you, the member."--NAR
Look past the thin layer of hype attached to this view of AHPs and consider the fact that this initiative is actually detrimental to the intentions of the people supporting it. There IS merit to the notion of larger purchasing groups having more clout relative to smaller groups. HOWEVER this only applies to the administrative portion of the expense, which may range from 10-20% of the premium dollar (retention.) That means that 80-90% of cost are associated with claim dollars (experience.)
Also, groups can ALREADY combine purchasing power through consortium arrangements. The net effect of this is that groups can save a few % points of retention. However, to really impact costs one needs to affect claims.
The real meaningful impact of AHPs is that, by crossing state lines, they would become exempt from state regulation per ERISA. This would enable smaller health plans to, like self-funded plans for larger employers, exclude benefit payments that are otherwise mandated for insured programs by the state. Those who are impressed by the hype are reminded of last year's lawsuit by the U.S. Labor Dept. of Labor versus a New Jersey association charged with mismanagement of a health plan that left participants with more than $6 million in unpaid health claims.
The following are examples of the types of ERISA violations that lead to criminal enforcement by the Labor Dept.:
The failure of fiduciaries to operate the plan prudently and for the exclusive benefit of participants.
The use of plan assets to benefit certain related parties in interest to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals.
The failure to properly value plan assets at their current fair market value, or to hold plan assets in trust.
The failure to make benefit payments...due under the terms of the plan.
Taking any adverse action against an individual for exercising his or her rights under the plan (e.g., being fired, fined, or otherwise being discriminated against).
The failure of employers to offer continuing group health care coverage for at least 18 months after leaving their employer. See the COBRA booklet for additional information.
What NAR's position boils down to is political spin focusing on clout and cost, when the real effect will be more bare-bones plans resulting from the ERISA exemption. Therefore, the honest argument is to disallow states from mandating benefits and allowing plans to exclude whatever they want from programs and essentially pull the wool over the eyes of less educated employees by overstating their benefits. Is this what people want? Please leave your comments and suggestions.
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