Based on a review of the technical literature and the testimony of scores of witnesses before the U.S. House of Representatives and the U.S. Senate, as well as first-hand experience in the field for about 20 years, this author draws a number of conclusions with regard to Association Health Plans and their position in the political arena and in the marketplace.

• The market for health insurance is dominated by a few large insurers in most states, and in some cities and towns there is only one insurer.

• While these large insurers may meet the needs of many customers, often they do not meet the needs of individuals and small businesses.

• It is difficult for rivals to enter the health insurance marketplace in most states because of national barriers to entry as well as artificial barriers created by unwise state regulations.

• Most of the uninsured tend to be young and healthy, have low to moderate incomes, and be especially sensitive to the price of insurance.

• Most of the uninsured are connected to the workplace, and most uninsured workers are employees of small businesses.

• Small businesses are especially burdened by the lack of competition and by unwise regulations.

• Among the unwise regulations, state-mandated health insurance benefits are estimated to cause as many as one in every four uninsured persons to be without health insurance.

• Guaranteed issue requirements, community rating, and other restrictions on underwriting also make things worse by causing the sick to overinsure and the healthy to underinsure and by destabilizing the small group market.

• By uniting many small firms with similar interests across the country, AHPs potentially could take full advantage of economies of scale and lower health care costs for their members.

• Costs would be further lowered because AHPs would be able to function under one uniform set of federal regulations rather than 50 sets of state regulations.

• AHPs would be able to avoid mandated benefits and the other complex, cost-increasing regulations imposed in different states.

• AHPs have the potential to insure millions of people who are currently uninsured.

"AHPs could lower small business insurance costs by as much as 25 percent."

No one can predict the exact effects of the expansion of AHPs into the health insurance marketplace. Estimates are that AHPs, operating under federal law, could lower small business insurance costs by as much as 25 percent. Estimates of the number of additional people who would obtain health insurance range as high as 4.5 million.

This is why AHP legislation is a high priority for the Bush administration. As Department of Labor Secretary Elaine Chao explained:

The president has made affordable and accessible health insurance for small businesses a priority of this administration. By banding together to leverage their purchasing power, Association Health Plans will enable small companies to obtain health insurance on terms similar to those now enjoyed by large firms, establishing an important new way to lower costs and expand coverage.