Letter from Alice A. Molasky-Arman to Shelley Berkley, April 21, 2005, regarding opposition to federal legislation on Association Health Plans

KENNY C. GUINN Governor STATE OF NEVADA ALICE A. MOLASKY-ARMAN Commissioner of Insurance SYDNEY H. WICKLIFFE, C.P.A. Director DEPARTMENT OF BUSINESS AND INDUSTRY DIVISION OF INSURANCE 788 Fairview Drive, Suite 300 Carson City, Nevada 89701-5491 (775) 687-4270 ? Fax (775) 687-3937 Internet Address: doi.state.nv.us E-mail: insinfo@doi.state.nv.us April 21, 2005 The Honorable Shelley Berkley U.S. House of Representatives 439 Cannon House Office Building Washington, DC 20515-4708 Dear Congresswoman Berkley: As Commissioner of the_Nevada Division of Insurance, I am writing to express my strong opposition to federal legislation that would create Association Health Plans (AHPs). I understand such legislation, H.R. 525, has been passed, again, by the House Education and the Workforce Committee and may soon come to the floor of the House for a vote. H.R. 525 would allow AHPs to form and operate in Nevada outside the authority of my office and beyond the reach of proven state consumer safeguards and solvency laws. If enacted into law, this could do irreparable harm to our small group market and strip our citizens of critical protections. Although I share the sponsors' concern for the growing number of small business employees who cannot afford adequate coverage, the fact is this legislation would do little, if anything, to address this problem. H.R. 525 ignores the root cause of the current crisis - skyrocketing healthcare spending. Unless spending is brought under control no attempts to increase competition or enhance options for small businesses will truly make insurance affordable and, thus, promote coverage. Even more troubling is the harm the legislation would do to consumers. H.R. 525 would: (1) permit risk selection thereby creating opportunities for "cherry-picking" among healthier groups; (2) allow inadequate capital standards and solvency requirements, both of which are inferior to existing state standards; (3) eliminate proven state consumer protection laws, including those designed to allow consumer appeals of adverse plan decisions and those aimed at preventing and fighting fraud; and (4) allow AHPs to ignore state benefit requirements. To add insult to injury, while longstanding state oversight and consumer protections would be eliminated, H.R. 525 provides no additional resources to the Department of Labor to regulate AHPs or help consumers. The Honorable Shelley Berkley April 21, 2005 Page 2 I remain committed to improving access to affordable insurance for small business owners and workers in Nevada. Together, we can find solutions that will be effective and not lead to greater problems in the future. H.R. 525 is clearly not the answer and I urge you to oppose it. Sincerely, AAMA:da Cc: Lisa Foster, Deputy Chief of Staff, Office of the Governor Sydney H. Wickliffe, C.P.A., Director, Business & Industry H:\s\molasky\letters\AHP Letter to House Deleg.4-21-05