A coalition of business groups and health insurance carriers, led by the Iowa Association of Business & Industry and the Federation of Iowa Insurers, hopes that the Legislature will approve a measure allowing them to offer association health plans in Iowa as a means of addressing high health-care costs.

Senate File 345 would allow members of “bona fide associations” who work for small employers, and their spouses and dependents, to be treated as one group for the purpose of purchasing health insurance. Its companion bill in the House is House File 790.

Another provision in the bills would allow health insurance carriers to provide premium credits or discounts to employers that establish wellness or disease management programs.

“We’re very excited about this as a possibility,” said Janet Griffin, vice president of public policy for Wellmark Blue Cross and Blue Shield, which is among the insurers advocating the measure. Companies with up to 50 employees that are members of associations that have been in existence at least five years and meet other requirements would be eligible for the coverage.

According to a 2006 survey of Iowa employers, the state’s smallest employers are hit hardest by rising health-care costs. Of the 900 companies surveyed in the Iowa Employer Benefits Study by David P. Lind & Associates L.C., those with fewer than 20 employees had average premium increases of 15.4 percent, twice the rate of increase of companies with 250 to 1,000 employees.

An initial effort to get an association health plan bill passed by the Legislature failed last year. Insurers were concerned that legislation would have created exceptions allowing certain associations to be formed in a way that would have overridden reforms that had been put in place in the early 1990s, Griffin said.

Tom Alger, a spokesman for the Iowa Insurance Division, said his agency doesn’t have any objections to the current proposed legislation.

“This maintains the consumer protections that we were concerned about,” said Alger. “There’s an absence of ‘cherry-picking,’ which was our concern – picking the preferred business and leaving the other businesses out of the group.”

Two years ago, Iowa Insurance Commissioner Susan Voss was part of a national coalition that opposed a congressional bill allowing small businesses and trade associations to form national insurance pools. Opponents of that proposal said it would have led to increased fraud by exempting these types of insurance arrangements from states’ oversight.

Sen. Steve Warnstadt, a Democrat who chairs the Senate Commerce Committee, said last week he feels “very confident” that the Senate will act on SF 345, along with a separate bill, Senate File 346, which would create a uniform application form for coverage under the plans, within the next two weeks.

John Gilliland, ABI’s government relations vice president, said he’s “very optimistic” the Legislature will allow insurers to offer the new coverage.

“Democrats and Republicans alike campaigned on allowing health insurance pooling to make it more affordable for employees and their families,” he said.

“The fact that employer groups and insurers have come to a common understanding on it, I think the Legislature is very receptive to it.”