Rising health care costs have hit builders hard. At best, builders face average annual premium increases of at least 15 percent. The starker reality is that builders are trading off pay raises for health insurance benefits or, worse, need to cut out benefits altogether.

"General medical insurance is very expensive, our costs went up 18 percent this past year,'' says Kristin Farese, office manager at R.A. Franchi Corp. in Newton, Mass., which provides nine employees 100 percent coverage on HMO Blue from Blue Cross Blue Shield of Massachusetts.

"We have thought about having the employees pay a share, but most of our people have been here for a long time and we want to keep up with the benefit," Farese says.

All the research indicates that the health insurance problem is growing worse: The U.S. Census Bureau reports that 15.2 percent of the population--an estimated 43.6 million people--were without health insurance in 2002, up from 14.6 percent the year before. The Census also reports that 60 percent of the uninsured are employed by small businesses or are the dependents of workers employed by small businesses.

Small business remedy

One solution championed by the NAHB and leading business groups such as the National Federation of Independent Business and the U.S. Chamber of Commerce is for the federal government to make it easier for trade groups to form association health plans (AHPs). The Congressional Budget Office estimates that by leveraging their memberships, large trade associations can reduce average health care premiums 13 percent to 25 percent annually, which could help insure up to two million previously uninsured workers.

Today, state and local trade groups offer AHPs, but the administrative burden of managing plans across state lines is prohibitive. Legislation pending in Congress would let trade groups offer health plans across state lines without having to adhere to state benefits mandates. Exempting AHPs from benefits mandates is very controversial, as critics such as the Blue Cross Blue Shield Association claim important benefits required by law in many states--maternity benefits, cancer screenings, and mental health services--could go uncovered.

The idea behind an AHP is for trade associations to offer health insurance the same way large corporations and trade unions do under the Employee Retirement Income Security Act (ERISA) of 1974. The federal Department of Labor, which under ERISA manages 275,000 plans that cover 67 million people, would oversee the AHP program.

AHP legislation, the Small Business Health Fairness Act of 2003, passed the House on June 19 by a vote of 262 to 162. The bill has the strong support of President Bush, Speaker Dennis Hastert (R-Ill.) and 36 Democrats, including Nydia Velazquez (D-N.Y.), the ranking Democrat on the House Small Business Committee. Olympia Snowe (R-Maine), introduced a Senate side bill earlier this year, which was co-sponsored by Kit Bond (R-Mo.), Jim Talent (R-Mo.), John McCain (R-Ariz.), and Elizabeth Dole (R-N.C.).

Tough fight

Despite the strong bipartisan support, proponents face a tough fight to get the Senate version passed. For starters, the Senate debate on health care is more focused on passing a prescription drugs bill and holding hearings on the general issue of health care as opposed to specific remedies like AHP legislation.

Another problem is that no major Democratic senators support AHPs and Majority Leader Bill Frist (R-Tenn.) and Judd Gregg (R-N.H.), chairman of the influential Health, Education, Labor, and Pensions committee are both lukewarm on AHPs.

"AHP legislation has passed the House four times," says Jenna Morgan, the NAHB's legislative director for labor, small business, and appropriations. "We want to know why the Senate won't consider this."

Part of the reason the Senate is so tepid is that organized labor, the Blue Cross Blue Shield Association, and the National Governors Association all oppose AHPs. One of the standard arguments these groups make against AHPs is that there's no guarantee the trade associations can raise enough money to fund the plans and pay claims on time. Opponents claim AHPs will only insure the healthiest individuals, forcing unhealthy workers to buy available Blue Cross or other plans, thus escalating premiums.

Proponents such as the NAHB say the latest version of the AHP legislation provides adequate solvency safeguards--up to $2 million in some cases--standards that corporate and union plans are not held to. The proponents also claim that the trade groups would have no incentive to offer less coverage than strong corporate or union plans, because people wouldn't join a plan that offered inferior benefits.

Rising Costs The Kaiser Family Foundation's 2003 Employee Health Benefits Survey reports steep cost increases for medical insurance, research that associated health plan proponents are using to make a case for swift action in Congress. Here are the highlights:

* Health insurance premiums increased 13.9 percent in 2003--the largest annual increase since 1990.

* The 2003 increase marks the second consecutive year that health insurance premiums have outpaced inflation by more than 10 percent.

* Over the past three years the amount of insurance premiums employees pay for family health coverage has increased almost 50 percent.

* Nearly all workers--96 percent--now face a co-payment or co-insurance for doctors' office visits.