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AHPs Will Improve Access to Affordable Health Insurance for Small Business Owners and their Employees, Witnesses Say

WASHINGTON, D.C. -

The House Employer-Employee Relations Subcommittee, chaired by Rep. Sam Johnson (R-TX), heard testimony today on Association Health Plan (AHP) legislation that will significantly expand access to health coverage for many of the 41 million Americans who are currently uninsured. The hearing came in the midst of national Cover the Uninsured Week.

The Small Business Health Fairness Act (H.R. 660) -- introduced by Johnson, Rep. Ernie Fletcher (R-KY), Education & the Workforce Committee Chairman John Boehner (R-OH), Rep. Cal Dooley (D-CA), and Rep. Nydia Velasquez (D-NY) on February 11, 2003 -- creates AHPs, which allow small businesses to band together through associations and purchase quality health care at a lower cost.

“Sixty percent, or 24 million, of uninsured Americans work in small businesses. Some of these people are offered insurance and turn it down because they can’t pick up their part of the tab,” said Johnson. “It’s time we leveled the playing field for small business and gave them the health care clout they deserve.”

Ann Combs, the assistant secretary for employee benefits security, described the problem: “Although most working Americans receive health insurance from their employers, small firms with fewer than 100 employees find it particularly difficult to offer benefits. Just 49 percent of these small businesses offer insurance, compared with 98 percent of larger firms with 100 or more employees.”

Calling AHPs a “substantial solution to this problem,” Combs said that the bill “can help make coverage a reality for more small businesses.”

Phyllis Burlage, a small business owner who runs the accounting firm Burlage Associates in Millersville, Maryland, said that her firm incurred a 45 percent rate hike to provide health care for her employees this year.

“Without the ability to shop for more affordable options, we are left with the choice to shift costs or drop coverage. Association health plans would end the nightmare of health care purchasing for small businesses,” said Burlage. “Simply put, the lack of competition in the small group market is making insurance company executives richer at small businesses’ expense.”

Gregory Scandlen, the director of the Center for Consumer Driven Health Care at the Galen Institute, said that AHPs will “inject more competition, innovation and choice in a market that is approaching monopoly conditions.”

“Greater competition should make health plans more responsive to the demands of their customers, improve service, expand benefit options, and increase the numbers of small employers who provide coverage,” said Scandlen.

The Small Business Health Fairness Act (H.R. 660) would increase small businesses’ bargaining power with health care providers, give them freedom from costly state-mandated benefit packages, and lower their overhead costs by as much as 30 percent -- benefits that many large corporations like GM and UPS and many unions already enjoy because of their larger economies of scale.

The bill currently has more than 95 cosponsors, including House Speaker Dennis Hastert (R-IL), Small Business Committee Chairman Don Manzullo (R-IL), and Reps. Ed Case (D-HI), Raul Grijalva (D-AZ), Jim DeMint (R-SC), Joe Wilson (R-SC), Todd Platts R-PA), Tom Cole (R-OK), John Carter (R-TX), Marilyn Musgrave (R-CO), and Marsha Blackburn (R-TN).

A broad and diverse coalition of more than 100 groups have endorsed the bill, including the U.S. Chamber of Commerce, the National Federation of Independent Business, the American Farm Bureau Federation, the Associated Builders and Contractors, The Latino Coalition, National Black Chamber of Commerce, the National Association of Women Business Owners, and the National Restaurant Association. Companion legislation was introduced in the Senate last week

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