Trade associations representing small employers are eyeing the potential benefits to their own organizations if Congress passes legislation that would allow them to offer health insurance to their members.
The groups could bolster their standing among their members and potentially enable associations to drive up their all-important membership rolls.
Given the rising cost of healthcare, being able to help their members get access to less expensive health insurance could make trade-association membership more attractive to small businesses that had not previously seen the value of joining.
“It’s clearly a benefit that will make membership more effective,” said Amanda Austin, manager of legislative affairs for the National Federation of Independent Business (NFIB). “A good plan certainly would be something that individuals would look at and consider” when weighing membership, said Mary Stark Hood, vice president of member benefits and strategic alliances for the National Association of Realtors.
Associations are best-known in Washington for their lobbying activities, but the organizations also provide a plethora of other services and benefits, including connecting members to discounted health, property-casualty, automobile and other types of insurance.
Groups such as the NFIB have spent millions lobbying Congress on bills that would allow trade associations to pool their members and provide them with health insurance at negotiated rates. The Senate is slated to take up a bill next week that would create these association health plans (AHPs), also called small-business health plans.
The legislation has drawn the intense opposition of most congressional Democrats, along with many state officials, because it would exempt AHPs from state laws that limit premiums or require insurers to cover certain services. Organizations such as the American Cancer Society and the American Diabetes Association have been lobbying against the legislation.
Small-business employees are especially prone to being uninsured or not being able to access comprehensive and affordable policies, and healthcare is their most pressing issue, some employer groups say.
The Senate bill would allow trade associations to negotiate with health insurers for group health plans made up of their members across the country. The House has several times passed legislation to the same effect.
Trade associations have long been in the business of helping their members buy various types of insurance. Typically, the associations get a royalty or a fee from the insurance company they contract with. In other cases, the association merely acts as a referral service to insurance providers they have researched.
One of the AHP legislation’s strongest opponents provides similar services to its members. AARP offers health insurance to members, with a focus on plans that provide additional benefits to people on Medicare. The revenue generated by the services helps bankroll AARP’s lobbying, outreach and other activities.
Under the new bill, associations would be more involved in the process of providing health insurance to small-business employees and would become akin to large employers that strike deals with health insurers.
“Associations would then take on a role … as a human resources department,” said Stark Hood.
Some critics of AHPs say that trade associations stand to make big money if the legislation is enacted and have suggested that the appeal of the potential revenue from administering health benefits is one of the reasons why the associations are lobbying so hard on the bills.
The bill’s advocates, on the other hand, maintain that the structure of both the Senate and House bills precludes them from spending any of the money they take in on anything other than their health plans. The associations will not get royalties or fees from the insurance companies, either, said Joe Rossman, vice president of fringe benefits for Associated Builders and Contractors.
According to aides with the Senate Health, Education, Labor and Pensions Committee, insurance premiums would be paid into a trust that would reimburse the association for its “reasonable expenses” and pass the rest on to the health insurance company providing the benefits.
Trade associations will find a way to benefit from the plans financially, insists Carmen Balber of the Foundation for Taxpayer and Consumer Rights. “There’s nothing in the bill that prevents associations from making money off these plans,” she said. What constitutes “reasonable expenses” is not clearly defined, she said.
Association executives insisted they do not view AHPs as a cash cow. “We’re not really here to make money off an insurance product,” Austin said. Associations “are looking to provide a service,” Rossman said.
“There are thousands of trade associations” that could participate in the new market, Austin said. Because many small-business owners belong to more than one organization, the associations would be competing with each other in providing health insurance, she said. Providing better healthcare options would give one association a “competitive advantage” over others, she said.
“I don’t know that every association would have an interest,” said Stark Hood, noting that health insurance is a “complex area.”
Some trade associations would steer clear of the health-insurance market, said Kristie Darien, executive director of the Washington office of the National Association for the Self-Employed (NASE).
“We don’t know if they’ll be viable options” for every association, especially smaller ones that could not handle the administrative burdens, she said.