APA Opposes Bill That Could Override Parity Laws

APA is working to defeat federal legislation that would undermine consumer protections in state insurance laws, including requirements to provide parity in insurance benefits for those with mental illness.

The Small Business Health Fairness Act of 2005 (HR 525) passed the House of Representatives on July 26 by a vote of 263 to 165 and was referred to the Senate Committee on Health, Education, Labor, and Pensions.

The bill is intended to address problems associated with lack of access to insurance coverage for people who work for small businesses. It would allow organizations such as trade, industry, and professional organizations to sponsor association health plans (AHPs) for their members.

The bill amends the Employee Retirement Income Security Act of 1974 (ERISA), which currently grants exemptions to self-insured plans from state laws concerning the provision of parity and other consumer protections. Those exemptions would be extended to AHPs.

AHPs would be regulated by the Department of Labor instead of by state agencies. An organization sponsoring an AHP would be required to offer it to all its members.

In September 2002, when an earlier version of the bill (HR 660) was introduced, the Department of Labor released a report that praised AHPs because “by operating under federal law, [they] can avoid the cost of state benefit mandates.”

The report, “Association Health Plans: Improving Access to Affordable Health Care for Small Businesses,” lists as an “AHP advantage” the fact that other insurance offerings are hampered by the“ high cost of having to comply with the requirements of up to 50 state insurance companies including state-mandated benefit requirements” (Psychiatric News, May 2, 2003).

APA issued an Action Alert on July 21, prior to the action in the House of Representatives on the most recent version of the bill. APA's Department of Government Relations urged members to tell their representatives that HR 525“ would override state law, setting back years of progress on coverage of mental health care and other consumer protections.”

Thirty-six states have passed laws requiring some form of parity in mental health benefits, according to the alert.

Last March the Mental Health Liaison Group sent letters to Rep. Dennis Hastert (R-Ill.), speaker of the House of Representatives, and Sen. Bill Frist, M.D. (R-Tenn.), Senate majority leader, expressing concern about the legislation.

Coalition members, including APA, cited a report from the Congressional Budget Office claiming that “any increase in coverage [for those in small businesses] would “likely be minimal because most of those covered by AHPs would have been previously covered by traditional plans.”

The legislation presents problems other than erosion in protections for state-mandated benefits. The Health Policy Institute of Georgetown University issued the report “Association Health Plans: Loss of State Oversight Means Regulatory Vacuum and More Fraud” this past summer.

An undated press release about the report stated, “States' comprehensive tools used to prevent, identify, and shut down fraudulent plans and protect consumers would be lost under AHPs and could not be replicated at the federal level.”

The author, Mila Kofman, J.D., wrote that the “bills' regulatory framework, broad preemption of states, deficiencies in federal regulatory tools, and resource constraints.. .create conditions that would make it almost impossible for the federal government to protect businesses and workers covered by AHPs against fraud.”

Congressional Quarterly Today reported on July 26 that the bill“ is unlikely to advance in the Senate.” Similar legislation has failed there in previous years.

The text of the Small Business Health Fairness Act of 2005 can be accessed at<http://thomas.loc.gov> by searching on the bill number, HR 525. ▪