Proposed AHP legislation would allow small businesses to band together through trade and professional associations to purchase affordable health packages for themselves and their employees.

AHPs level the playing field. By joining together, small employers would enjoy greater bargaining power, economies of scale, and administrative efficiencies, all benefits already enjoyed by large companies.

AHPs would make insurance more affordable for small businesses. The Congressional Budget Office (CBO) has estimated that small businesses obtaining insurance through AHPs will enjoy premium reductions of 13 percent on average.

Because insurance would be more affordable, more small firms would provide it to their employees. According to CBO, approximately 2 million American workers and their families who would otherwise not be insured, would obtain health insurance through AHPs.

AHPs would be certified by the U.S. Department of Labor (DOL) and would have to meet certification standards developed by DOL. Only bona fide trade or industry associations, that have been in operation for three years or more, could sponsor AHPs. They would have to meet strict requirements designed to protect participants and maintain solvency.

A number of provisions would prevent AHPs from ‘cherry-picking’ the healthiest population of workers. The proposed legislation makes it clear the AHPs must comply with the Health Insurance Portability and Accountability Act (HIPAA), prohibiting group health from excluding high-risk individuals or employers with high claims experience.