Secretary Elaine L. Chao Releases Report on Association Health Plans

Archived News Release — Caution: Information may be out of date.

Washington, D.C.—U.S. Secretary of Labor Elaine L. Chao today released a report showing how legislation now pending in Congress to establish federally regulated Association Health Plans (AHPs) will make quality health insurance more affordable and accessible for millions of small business owners and their employees.

“Six of every ten Americans without health insurance are in families headed by someone working in a small business,” said Chao. “That is why the President has made affordable and accessible health insurance for small businesses a priority of this Administration. By banding together to leverage their purchasing power, Association Health Plans will enable small companies to obtain health insurance on terms similar to those now enjoyed by large firms, establishing an important new way to lower costs and expand coverage.”

A recent study by the Kaiser Family Foundation pointed to the dramatic decline in health care coverage among small businesses, which showed only 45% of small firms offer the coverage. That study attributed the lower coverage among small businesses of four to nine employees to surging health premiums and the economy.

The Department of Labor report on AHPs cites Congressional Budget Office (CBO) analysis of legislation pending in Congress indicating that small businesses can expect to reap savings averaging 9% to 25% of the cost of their health insurance premiums. Such significant savings greatly increase the likelihood that small firms will be able to offer health insurance to workers and their families. The CBO study estimated that 330,000—and potentially as many as 2 million—persons now without health insurance could become covered if the legislation is enacted.

AHPs would achieve these savings by affording small businesses the same bargaining power, administrative efficiencies, flexible benefit design, and advantages of risk pooling through their association or business organization that currently are available to large employers and union-sponsored plans.

“Small business has long been the engine of our economic growth,” Chao said. “They should not be forced to pay higher costs than large corporations for health insurance, or to choose between wage increases and important health benefits for their workers. The AHP legislation will level the playing field and provide access to affordable quality health insurance to the millions of Americans working in small businesses.”

On August 6^th, Secretary Chao wrote to over 80 business associations with tips on how to avoid health insurance fraud. With insurance premiums rising an estimated 16.5% in 2001 for small businesses, promoters of health insurance scams aggressively target small businesses and their employees. The AHP legislation contains effective federal protections of certification and oversight administered by the U.S. Department of Labor.

The report, Association Health Plans: Improving Access to Affordable Quality Health Care for Small Businesses, is available on the Internet at http://www.dol.gov/pwba/pdf/ahp-report.pdf or by calling 1-866-275-7922.

Archived News Release — Caution: Information may be out of date.