Statehouse leaders say they want to attract more insurance companies to the state, so employers have more plans and products to choose from. But others say the proposed changes may cultivate competition, but that won?t help small businesses and families. New Hampshire Public Radio?s Raquel Maria Dillon reports.
Senate Bill 110 would shake up New Hampshire?s small group health insurance market in two ways.
First, it changes the definition of the market. Currently, small businesses with fewer than 100 employees buy health insurance in the ?small group market?. Other states define small groups as businesses with fewer than 50 employees. This bill would bring New Hampshire in line with the rest of the country.
The other part of the bill is much more controversial ? and complicated. The bill would change how insurance companies are allowed to calculate what they charge for insuring different groups of people.
Republican John Hunt of Ringe chairs the House Commerce Committee.
HUNT :22 the goal of SB 110 is to reintroduce competition into the marketplace. To roll back what was passed 10 years ago, a fad at the time, ?community rating? which unfortunately drove all the insurance companies out of the state and left us with 2 companies.
Hunt calls the ?community rating? trendy, blames the regulations for rising health insurance premiums. But 12 other states use the same system.
Currently, insurers calculate insurance premiums by looking at the size and ages in a particular group of employees. And two insurance companies ? Anthem/Blue Cross-Blue Shield and Cigna ? control about 85% of the market.
HUNT :12 what we?re doing is just loosening up parameters. To give insurance companies a little more underwriting criteria that they can measure their risk and give people products that really meet their needs.
There are several other factors that insurers could use to calculate risk. Under the SB 110, health insurance premiums would vary more, because insurers would be allowed to consider additional factors. Insurers might use employees? medical conditions, locations, and occupations ? to calculate the cost of covering a specific group of people. It?s called experience rating, or underwriting.
Former state rep Lee Quandt helped defeat a similar bill two years ago and now his son is on the House Commerce Committee. Quandt paints a dire picture of what SB 110 would do.
QUANDT :19 if you?re an electrician, a roofer, a sider, a logger. Now you?re being rated for each one of those factors. If you have maybe a sick wife, asthmatic child, rated on top of that.
Premiums for small business employees in the North Country and the Seacoast would be higher, because healthcare costs are higher there.
Quandt calls himself a life-long conservative Republican, but he?s upset with the Republican leadership for pushing this bill, and suspicious of their arguments.
QUANDT :17 The catch phrases are there. It?ll increase competition, it?ll lower premiums. If you?re young and healthy you will pay slightly less, but if you?re 45 or more, you?ll pay more depending on your health condition.
It?s called cherry picking. Quandt says small businesses could face a choice: pay more for their employees? health insurance, or not provide health insurance at all.
The bill?s supporters say that?s true. Some groups would pay more. But others would pay less under the proposed experience rating system. And those small business owners might decide to offer health insurance, where they hadn?t before. Commerce Chair John Hunt:
HUNT :21 what this legislation does is reintroduce way insurance operates. Right now with current community rating law we have tried to force one rate for everyone. That?s not how insurance works. Based upon measuring risk. The more you use the system, the more you should pay for it.
Greta Coco is the president of First Benefits, a insurance consulting firm in Manchester.
COCO :16 this is just going to turn out to be such an onerous task for the employer especially in the small groups. To go to their employees and dependents and ask invasive questions upon which their rate will be based.
Coco also heads the New Hampshire Underwriters Association, an insurance brokers? trade group. She says the members are split about whether SB 110 will help or hurt their clients, small business owners.
The bill might lure new insurers to the state, but Coco says they won?t be able to negotiate discounts with doctors and hospitals.
COCO :17 some of the companies that are looking to come back, while they will bring back choice, they will not reduce premiums. They won?t get steep discounts that current incumbent carriers get based on volume.
Coco says her clients depend on her to predict how much their premiums will increase, so they can plan their budgets. The changes, she says, could lead to a much less predictable market. And Coco argues no one can promise that competition will lead to lower premiums, because there?s little data to back that up.
COCO :22 every state is wrestling with this same theme. This is why 2 years ago when SB 110 was SB 119, we begged for state-specific information. This is the first year dept was able to report such info.
An Insurance Department analysis showed that if SB 110 passes there will be some winner and some losers. Premiums would go up for some groups and down for others ? they?ll balance out.
But as to the long term effects of the change on insurance premiums statewide, Deputy Insurance Commissioner Alex Feldvebel says beyond the immediate impact, it?s as good as a guess.
FELDVEBEL :?? It?s just a judgment call about what change has to happen in the market in order to improve it. That?s what the legislature is faced with doing.
When the bill comes to the House floor on Thursday, legislators will have to make a quick study of the insurance marketplace and make their own judgment call. Governor Benson joins the Republican leadership in arguing that doing away with community rating is the best way to restore competition.
Deputy Commissioner Feldvebel:
FELDVEBEL :20 what the legislature would be saying in passing this bill is we?re placing a high priority on bringing new insurers into the market and introducing more competition around product design. We?re willing to tolerate, the increased rate variation from one group to the next in order to get that.
Feldvebel says SB 110 will certainly shake things up a bit, but it doesn?t address New Hampshire?s high healthcare costs.
If state reps look to the House Commerce Committee for guidance from their fellow legislators, the won?t find it. The committee?s vote was an somewhat ambiguous 10-to-8 to pass the bill.
For NHPR News, I?m RMD.
