Republicans have acquired an attachment to the word “modernization”.  Especially when it comes to health care legislation.  And like most of their deceptively but cleverly named bills (Healthy Forests Initiative, anyone?), modernization has been assigned a new meaning.

In the reality-based health wonk community, modernization evokes images of electronic health records and eprescribing systems.  But for the Republican party, “modernization” is now synonymous with “corporate handout”. 

The Medicare Modernization Act, which created Medicare Part D, resulted in daily birthday gifts for drug companies and insurers alike.  Now Mike Enzi’s Association Health Plan bill, officially titled the Health Insurance Marketplace Modernization Act, will continue the festivities for years to come among those ineligible to participate in Medicare’s debacle.

The theory behind the bill is this: small business owners can’t afford health insurance for their workers because they are just too tiny, and their bargaining power is nil.  If these small businesses are allowed to pool their resources, across the fifty states, they will gain more market power and insurers will bow to their demands.

Unfortunately, association health plans are a perfect lesson in unintended consequences.  Because insurers will be freed from individual state regulations, they will race to the bottom; wooing business owners with the barest and bony of insurance plans. 

What kind of coverage will be dropped?  Everything ranging from contraceptives to dental anesthesia (imagine bargaining with your dentist for that one).  In fact, head over to this table to see the dizzying array of benefits that you would lose in each state should congress pass this legislation.

What’s more, it’s not always the lack of bargaining power that’s keeping small businesses from getting affordable rates.  It’s the fact that in most states monopolistic insurance markets are discouraging competition.  As the New York Times examined last week the largest insurer had 43 percent of the market for small group coverage in most states, up a whopping 10% in three years. In nine states, the largest carrier has more than 50 percent.  So while the number of uninsured rose by 6 million since 2000, and 9% of employers decided to drop health benefits, it’s no coincidence that insurer consolidation markedly increased as well. 

But the basic idea behind association health plans (besides obliterating necessary regulation) is good ol’ Consumer Directed Health Care (CDHC).  Even if we take this specific instance – lack of bargaining power among small businesses – it’s clear that CDHC can’t work.  If groups can’t bargain, how can individuals be anymore effective?  As other nations have shown, the best and most effective way of lowering health costs is to introduce the ultimate bargainer – the federal government.