Small Business Reading Room

Tuesday, July 26, 2005

AHP: association health plans

The House of Representatives is floating the old AHP solution to the high cost of health insurance again. Association Health Plans allow associations and such to offer health plans that are federally regulated. Federal regulation is, so far, much lighter than the regulations in the fifty states. Therefore the cost of these plans is much lower.

This plan will make the federal regulation of healthcare a much more succulent target for lobbyists and lead to more federal regulations so each special interest gets its' cut.

Instead of allowing power to move from the States to the Federal government, the Congress should act on the legislation authored by Rep. John Shadegg (R-Ariz.). His bill, (H.R. 2355), would allow consumers to purchase health insurance from any State. This will lead to a more efficient market in health insurance much as it has in credit cards and banking. Some States will offer more attractive regulatory regimes in order to attract a critical mass of health insurance providers. The resulting lower costs would benefit consumers and the industry both.

The status quo allows only very large employers to opt for federal (light) regulation. Small business deserves to have the marketplace respond to its needs too.


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