Governor approves association health plans

[urbanguy]

Gov. Linda Lingle on Tuesday signed into law a proposal to lower health insurance costs by permitting trade association health plans.

The bill was part of the administration's package of bills, which lawmakers in the finance, health and consumer committees approved last month.

Association health plans have been touted as a way for small and solo employers to increase their bargaining strength by banding together through such groups as the Hawaii State Bar Association and the Chamber of Commerce of Hawaii.

Twenty-four states have legislation enabling association health plans.

In Hawaii, the only remaining plan that resembles a purchasing coalition is the Legislative Information Service of Hawaii. The organization attributes its success to tight underwriting guidelines and close monitoring.

New businesses must wait three months before becoming eligible for the LISH plan, and if they leave the plan they can't be readmitted for a year. Additionally, LISH administers the entire program, from reviewing applications to making payments.

Some lawmakers expressed concern that the bill under consideration doesn't require full participation by members of an association, which could cherry pick the healthiest, lowest-risk members to participate.

That, they argue, would shift higher-risk members to other health plans and increase their costs.