NCPA - National Center for Policy Analysis

Association Health Plans

April 24, 2003

By the end of 2001, the Census Bureau estimated more than 41 million Americans were uninsured -- many of them young, healthy people with modest or low incomes. Part of the solution to insuring the uninsured is the creation of Association Health Plans (AHPs), says Dr. Donald L. Westerfield, a professor at Webster University in St. Louis.

AHPs are plans created for individuals and groups who belong to associations that are related to jobs, careers, or hobbies and interests. The potential for growth of this type of insurance is quite large -- given a favorable regulatory climate.

By uniting many small groups with similar interests across the country, Westerfield says, AHPs could take full advantage of economies of scale to lower health care costs for their memberships.

  • There are about 15,000 associations throughout the country.
  • Some six million Americans are already insured through associations and the number is growing.

Perhaps the most important argument for AHPs, Westerfield explained, is that millions of people who are not covered because of high costs or lack of availability would be able to obtain affordable coverage.

  • A Congressional Budget Office (CBO) analysis of legislation pending in Congress estimates that small businesses can expect to reap savings averaging between 9 percent and 25 percent of the cost of their health insurance premiums.
  • As a result, the CBO estimates that 330,000 -- and potentially as many as 2 million -- of the currently uninsured would obtain health insurance.

CONSAD Research Corporation estimates that expanding AHPs could result in an increase in employer-sponsored insurance coverage of approximately 2.3 million workers and 2.2 million dependents.

Source: Donald L. Westerfield, Ph.D., "Insuring the Uninsured through Association Health Plans," NCPA Policy Report No. 259, April 2003, National Center for Policy Analysis.

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