Association health plans need state regulation, legislators warn. (Briefing: NCOIL Spring Meeting).

Allowing association health plans to be exempt from state regulation would have "dire consequences," state insurance legislators are telling Congress.

Letters have already been sent to members of the Senate, where a hearing on the matter was held, by Vermont state Rep. Kathleen Keenan, a Democrat, who is also president of the National Conference of Insurance Legislators.

Such legislation would undermine state health reforms, eliminate consumer protections and threaten access to health coverage for many small employers, Keenan wrote in letters to Sens. Olympia Snowe, R-Maine, and John Kerry, D-Mass.

Previous congressional legislation that would have taken AHPs from under state regulation didn't get far.

President Bush has come out in favor of association health plans.

The president's support has changed the dynamics in Washington, D.C., said Ralph Scott of the Blue Cross Blue Shield Association. The Senate is going to be the battleground, he told state legislators during NCOIL's Spring Meeting in Savannah, Ga. The Blues association is talking with members of Congress to try to make sure they don't sign on to the bill, he said.

U.S. Rep. Ernest Fletcher, R-Ky., has reintroduced a bill he filed last year, which is similar to the one in the Senate, Scott said.

On Feb. 21, NCOIL approved sending a similar letter from Keenan to U.S. Rep. Dennis Hastert, speaker of the House.

The letter points out that the Congressional Budget Office estimates 80% of workers in small firms would see increases in premiums and another 10,000 of the sickest people would lose coverage entirely.