Executive Summary

The American health care system consists largely of employer-based group health insurance. After World War II, employers offered health care plans in order to attract employees. As the num-bers of employer-provided health plans grew, the federal government and the states regulated them heavily. One of the unintended consequences of increasing government regulation was to increase the numbers of people without health insurance. The high cost of complying with different state regula-tions has raised the cost of employer-sponsored health plans, leading many small businesses to drop coverage altogether. By the end of 2001, the Census Bureau estimated more than 41 million Ameri-cans 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). These 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. Proponents of AHPs argue that they have great potential to insure the uninsured. By uniting many small groups with similar interests across the country, AHPs could take full advantage of econo