Real Solutions Needed To Ease Cost, Expand Access; AHPs Would Raise Costs, Won’t Reduce Uninsured

April 21, 2005

The Blue Cross and Blue Shield Association (BCBSA) welcomes today's Senate Health, Education, Labor and Pensions Committee hearing examining ways to reduce healthcare costs and expand access to coverage for small businesses. The Blues are committed to developing long-term and thoughtful policy solutions to the challenges of rising healthcare costs and the growing number of uninsured Americans.

Blue Cross and Blue Shield Plans understand the impact rising healthcare costs are having on the ability of all Americans, especially those who work for and operate small businesses, to afford quality health coverage. BCBSA supports a range of approaches to address rising healthcare costs, including the use of evidence-based medicine to help assure the highest possible value for consumers, greater availability and use of generic drugs, and malpractice reform. In addition, Blue Plans have developed state-of-the-art tools to provide consumers with better knowledge to make informed and cost-effective decisions about their medical care, an important step in helping consumers contribute to keeping healthcare affordable.

BCBSA has developed policy options tailored to the diverse populations that comprise the uninsured in America. The proposals, including subsidies such as tax credits for small employers with low-wage workers, strategies to improve enrollment in public programs, and outreach to encourage higher income individuals to participate in coverage, could reduce the number of uninsured Americans by up to two-thirds. The policy options are detailed in BCBSA's report, "The Uninsured in America".

In considering policies to provide greater access, BCBSA welcomes innovative approaches, such as the creation of health savings accounts (HSAs), which offer greater choice to consumers and hold the potential to increase access to coverage while helping control healthcare costs. The Blues are taking a leadership role in offering HSA-compatible insurance products throughout the country. Blue Cross and Blue Shield Plans currently offer HSA products in 38 states and expect to have offerings throughout the country by 2006.

While HSAs offer real promise, federal association health plan (AHP) legislation raises serious concerns and the potential for unintended consequences. Research shows that legislation to exempt AHPs from state laws and oversight would not reduce the uninsured, and would raise premiums for most businesses. A recent report including 15 economic, policy and legal studies from sources like the Congressional Budget Office, Mercer Consulting, the California Healthcare Foundation and others, demonstrates that AHPs would not address the problem of uninsured workers, would expose consumers to widespread fraud and abuse, and would increase premiums for most small employers and their workers. The report can be found at www.protectyourhealthcare.com.

Federal AHPs would eliminate myriad consumer protections currently required by states across the country, including current protections that shield consumers from unlimited rate increases and the guarantee of an external review for any denied claims.

Because of these serious problems, BCBSA joins more than 1,300 organizations across the country – representing small business associations, farm bureaus, governors, physicians, attorneys general and others – who oppose federal AHP legislation.