This range of values is derived from sources in the economics literature that we cite in our report. First and most importantly, a majority of pertinent studies in the economics literature support values in this range. An additional reason is more subtle. All of the available studies of price elasticities describe changes in insurance rates resulting from price changes in the current market for insurance. However, I believe that allowing for the creation of AHPs fundamentally changes a segment of the insurance market.
Price is obviously an important factor.
But small businesses also face impediments to offering insurance that are due to lack of trust between themselves and insurance brokers, incomplete access to information describing available health plans and plan benefits, and a lack of resources to understand and manage the terms of available health plans. Association Health Plans will help overcome these barriers to insurance coverage. AHPs will be administered by organizations to which small businesses already belong, and thus have existing relationships and communication links. Thus, even if there were no price reduction associated with the creation of AHPs, I believe that they would result in increases in insurance coverage because they overcome some of these non-price barriers. And for any given change in insurance prices, I believe that an insurance market that includes AHPs would produce larger increases in coverage than the existing insurance market.