CAHI Responds to Wall Street Journal Article

11/27/2002

From: Tom Gardner of The Council for Affordable Health Insurance, 703-836-6200, ext. 386 Web site: http://www.cahi.org

ALEXANDRIA, Va., Nov. 27 -- A recent Wall Street Journal article (Nov. 21, 2002, "Nonprofit Groups that Tout Insurance Have Hidden Links") conveyed the impression that health insurers that sell insurance through various associations are somehow operating outside the laws intended to regulate health insurance products. According to the article, "What the groups don't tell customers is how they exploit a giant loophole in the rules that protect policyholders."

"The Journal reporter is simply confused," stated Dr. Merrill Matthews, Director of the Council for Affordable Health Insurance. "It is true that some state health insurance laws do not apply to insurers that sell through associations, but that doesn't mean they are operating outside of state law. The fact is that 46 states have laws that specifically authorize and regulate associations that sell health insurance."

Matthews continued, "About half of all employer health insurance plans operate under a federal law known as ERISA rather than state law. But you wouldn't say they were exploiting a 'giant loophole.'

"Associations that sell health insurance create more options for consumers and usually at more affordable prices. Not everyone can afford a 'Cadillac' plan, and those that sell expensive plans don't like other companies offering a more competitive product. But it's easier to complain than come up with competitive, affordable health insurance policies that people want," Matthews said. "And the rapid growth in policies sold through associations indicates that consumers want them."

CAHI is a research and advocacy association of insurance carriers active in the individual, small group, MSA, and senior markets. CAHI's membership includes health insurance companies, small businesses, physicians, actuaries, and insurance brokers. Since 1992, CAHI has been an advocate for market-oriented solutions such as MSAs to the problems in America's health care system.