National association health plans a recipe for fraud?

OLYMPIA—Insurance Commissioner Mike Kreidler is calling on Congress to reject President Bush's push for national association health plans, saying the proposal only makes today's health care crisis worse and is a recipe for fraud.

Kreidler was reacting to President Bush’s call during his State of the Union speech for national association health plans as a major initiative.

"The gravest social crisis we face today is the lack of affordable health care insurance," Kreidler said.

"I am pleased that President Bush recognizes this, but his proposal is the wrong solution to the problem. His proposal instills a false sense of hope and would cause significant, long-term harm to those it purports to help,” he added.

Kreidler said exempting association health plans from state regulation opens them up to fraud and abuse and would further fragment and destabilize the health insurance market. It will increase the number of under- and un-insured people, resulting in higher premiums for small businesses nationwide.

Association plans exist currently. They are sponsored by trade associations and chambers of commerce and are overseen by individual state consumer protection laws, coverage requirements and financial solvency requirements.

All of these safeguards that state regulation provides consumers would disappear under proposed national association health plans, according to Kreidler. Regulation would be left to the U.S. Department of Labor.

"This proposal is an open invitation to scam artists," said Kreidler. "Our experience is that the U.S. Department of Labor already lacks both the capacity and the will to aggressively regulate health insurance. To assume their role would change without significant new resources and a newfound commitment to consumer protection is not just naïve, it's irresponsible."

Supporters of national association health plans claim the Bush proposal would increase access by encouraging competition to effectively lower costs for small business owners who are struggling in our current health care crisis.

Kreidler said such cost reductions are a myth. Only a minority would benefit, he said.

The real beneficiaries are the associations themselves who would market these plans as a tool to build their own membership at a high personal cost to the whole health care system, he added.

"While some businesses might enjoy immediate lower premiums, the ongoing costs for others will be devastating," warned Kreidler. "These health insurance plans would only insure the healthy. The rest of us would continue to pay—as we do now—for those shut out of the system."

Kreidler vowed to continue to speak out against national association health plans and to advocate for comprehensive reforms of the current health insurance system without eroding decades of state-based consumer protection.

Washington State Insurance Commissioner release, January 28

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