[Congressional Record Volume 149, Number 97 (Friday, June 27, 2003)]
[Extensions of Remarks]
[Pages E1382-E1383]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SMALL BUSINESS HEALTH FAIRNESS ACT OF 2003

                                 ______
                                 

                               speech of

                           HON. DENNIS MOORE

                               of kansas

                    in the house of representatives

                        Thursday, June 19, 2003

  Mr. MOORE. Mr. Speaker, I rise in opposition to H.R. 660. It is being 
promoted by some in Congress as the silver bullet that will help small 
businesses get health insurance, but I believe that this legislation 
puts consumers at risk without helping small business owners get health 
insurance.
  Many of my concerns about AHPs mirror those of Sandy Praeger, the 
Kansas Insurance Commissioner. I will quote extensively from her 
remarks about AHPs made before the Senate Small Business and 
Entrepreneurship Committee on February 5, 2003.
  AHPs will not reduce the cost of health insurance for small 
businesses. In fact, the Congressional Budget Office (CBO) estimates 
that H.R. 660 would actually drive up the cost of coverage for 20 
million individuals--80 percent of small employers and their families 
who are now covered under employer-based health insurance plans. The 
results of this legislation could actually make coverage less 
affordable for the vast majority of small business workers who now have 
coverage. A recent study released by National Small Business United 
(NSBU) found that AHPs would result in more than 1 million more 
uninsured and cause premiums to skyrocket for the sickest workers.
  Additionally, H.R. 660 will hurt those who most need health coverage, 
and those who employ them. H.R. 660 could actually hurt those who most 
need health coverage by allowing AHPs to ``cherry pick'' only the 
healthiest, cheapest-to-insure individuals to participate in their 
plans. Most States prohibit this kind of health insurance 
discrimination, but H.R. 660 would preempt these anti-discrimination 
measures in most States, allowing AHPs to discriminate against those 
who most need coverage. Commissioner Praeger's remarks illustrate how 
H.R. 660 would undermine State reforms in this regard and leave sicker 
and higher risk employees out in the cold.
  In order to keep costs low, AHPs would have an incentive to target 
the people who are the least costly to insure--healthy, young people 
who rarely access health services. By giving AHPs the power to charge 
higher premiums for less healthy groups and the discretion to offer 
narrower benefits, these bills will allow AHPs to deter less healthy 
groups from enrolling. Small businesses that employ older, disabled or 
chronically ill individuals would be forced to pay more out-of-pocket 
or left behind altogether. As noted above, 80 percent of small 
employers will be left out and will likely see their premiums increase 
as the State-regulated health insurance market loses its healthy 
individuals to AHPs, leaving sicker and older individuals in the State 
market.
  State consumer protections, such as external appeals of disputed 
claims, would be ignored as well as other guaranteed benefits such as 
maternity care, mammograms, mental health treatment, or diabetes. For 
many years, I have supported efforts to enact a strong patients' bill 
of rights that would extend consumer protections to all Americans. This 
legislation, however, would expose millions of workers--in both small 
and large businesses--who now enjoy the advantages of State consumer 
protections into plans that are completely exempt from those 
protections.
  Fundamentally, AHPs would completely destroy the State insurance 
market. As Commissioner Praeger stated:

       The AHP legislation in Congress would undermine state 
     reforms and once again fragment the market. Each association 
     would create its own risk pool that, due to the benefits 
     provided, types of business in the association, or area 
     serviced, could have significantly lower risk than the 
     general market.

[[Page E1383]]

     While the bill does make some effort to reduce ``cherry 
     picking'' the NAIC believes the provisions would be 
     inadequate.

  Commissioner Praeger goes on to say:

       This self-selection is extremely disruptive to the 
     marketplace and will create a very unstable situation in an 
     already fragile small group market, likely reducing the 
     number of insurers willing to offer coverage in the general 
     market. Insurance is of little use unless the costs of caring 
     for the relatively few can be distributed among the many who 
     are healthy.

  AHPs would exempt health insurers from State rules that are needed to 
effectively govern health insurance companies. AHPs would also be 
exempt from State solvency laws and oversight and subject to inadequate 
standards. The American Academy of Actuaries has said that the solvency 
standards for AHPs contained in H.R. 660 are inadequate, and 
Commissioner Praeger's testimony underscores these concerns. Her 
testimony states that the solvency standards under the bill are 
``woefully inadequate'' and goes on to predict ``If a nationwide AHP 
were offered to a large association, a capital surplus of only $2 
million would result in disaster.'' Supporters of H.R. 660 claim that 
the Department of Labor has sufficient resources to oversee the new 
plans and prevent insolvencies and fraud. Commissioner Praeger believes 
that this is not the case. She notes that ``The Department of Labor has 
neither the resources nor the expertise to regulate insurance 
products.''

  More than 500 organizations--including many of the major consumer and 
health care provider organizations--have voice their opposition to this 
legislation. The legislation is also strongly opposed by the Nation's 
Republican and Democratic governors, attorneys general and insurance 
commissioners. Additionally, many in the small business community 
oppose H.R. 660, including the National Small Business United (NSBU), 
which has voiced its opposition to this legislation because it would 
hurt, not help, many small employers. They cite a recent study by 
Mercer found that AHPs would result in more than 1 million more 
uninsured and cause premiums to skyrocket for the sickest workers.
  I do understand that small employers are clamoring for relief from 
the high cost of health care, and I support efforts to improve 
individuals' and small businesses' ability to obtain quality health 
insurance. I have introduced H.R. 1937, the Small Business Health 
Insurance Availability Act. This bill would do several things to help 
uninsured Americans who work for small businesses get adequate health 
care. My legislation would establish a tax credit toward the purchase 
of health insurance for all small employers who choose to offer it. The 
credit will reimburse 20 percent of health insurance costs, up to $400 
per year for individuals and $1000 for family coverage. Businesses can 
get an additional 10 percent tax credit (up to 30 percent total) if 
they join in a Health Benefit Purchasing Coalition, which provides 
small employers a way to pool resources, negotiate collectively with 
insurers, and administer health plans for small employer groups. In 
order to foster innovation on the State level, the bill creates State 
grant programs for initiatives that expand health insurance to the 
uninsured through market innovations.
  I believe that we must help uninsured Americans to obtain health 
insurance while not putting individual insurance markets or consumers 
at risk. My legislation, in contrast to the very controversial AHP 
proposals, could be enacted into law immediately without disrupting 
health insurance markets or regulatory structures. It would also 
preserve the rights and protections of consumers in States and ensure 
that the business of health insurance remain regulated on the State 
level. It would also give small business owners, like their big 
business competitors, the opportunity to band together and bargain for 
better insurance rates and terms.

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