High risk pool part of health insurance plan

Lawmakers are close to passing another health insurance reform bill that stands to produce a new round of winners and losers among the state's 31,600 small businesses with 50 or fewer workers paying for health insurance.



In addition, four new insurance companies that recently entered the state say they will pull out if the proposed reform legislation, SB 125, to be voted on by the House Wednesday becomes law.



The winners under the reform will be the 24,933 smallest employers with fewer than 10 workers, which experienced health insurance premium increases of as much as 200 percent under the last reform attempt. These businesses are likely to see their rates go down, state lawmakers and insurance industry officials said.



The losers will be small businesses that enjoyed decreases or no increases in their premiums after the last reform, Senate Bill 110, lawmakers and insurance officials say. That reform gave insurers greater flexibility to set rates based upon the risk factors of an individual business. These business are likely see their rates increase.



Sen. Maggie Wood Hassan, D-Exeter, said, "There are going to be some readjustments of the rates. You're going to see people who had significant decreases have rates that are going to moderate up to the middle of the bell curve and people with exorbitant rate increases moderate down to the middle."



State Insurance Commissioner Roger Sevigny said, "It's likely that those who paid the very high rates will enjoy some reductions, and those paying lower rates will possibly, depending upon the business, see higher rates."



Depending upon who you ask, the rate increases and decreases will be moderate to catastrophic.



Small business owner Tom Murtagh is a principal of Atlantic Plans in Milton, which helps companies select employee benefits.



An opponent of SB 125, Murtagh predicts small businesses with 20 to 30 people will be socked with increases as much as 45 percent.



"There's no doubt in my mind we'll be revisiting this next year because these businesses are going to get hammered. They're going to get 40-45 percent increases to catch up to the level of community ratings levels that they had gotten relief from," he said.



Business and Industry Association of New Hampshire vice president Brett St. Clair has lobbied in favor of SB 125. But, he admits it's hard to estimate the ultimate outcome on rates.



"The bills have phase-in mechanisms, safeguards, but I've got to tell you it's a complicated situation. Even the best experts in the insurance industry have a hard time predicting what's going to happen and understanding all the different scenarios," he said.



Commissioner Sevigny said the result of SB125 could produce a new set of business owners calling representatives for relief.



"You may get phone calls from just a complete different set of people. Who knows? It's too early to tell now," he said.



Yet, St. Clair said, "We've heard from companies that saw slight decreases that are still in favor of going back because they feel more secure under the old system."



The newest round of insurance reforms is intended to fix problems that came about after lawmakers passed the last reform bill, known as SB 110.



The idea behind that effort was to give insurance companies more freedom to set rates based on risk. Competition would keep rate increases under control, its backers said.



But what followed were steep, sudden rate hikes for businesses in the North Country and on the Seacoast, where medical costs are high. Experts estimated that about 10 percent of the small businesses with fewer than 10 workers saw rate increases of 70 percent or more.



House Commerce Committee Chairman Rep. Sheila Francoeur, R-Hampton, said nearly everyone running for election in November heard from these businesses owners.



Thus it became a strong campaign issue, with Gov. John Lynch, who supports SB 125, running on a promise to bring about new health insurance reforms.



"While passed with good intentions, SB 110 dramatically increased health insurance costs for small businesses in New Hampshire," Lynch said last week. "This legislation will stabilize rates and provide relief for our small businesses."



Sevigny said one certainty about SB 125 is it will reduce the wide spread of prices being charged to small business for insurance.



Current law allows rates to differ as much as 12 to 1 among small businesses. One business, for example, might pay $1,000 for what another is charged $12,000. Under SB 125, the price spread would be narrowed to 3.5, Sevigny said.



Companies would also no longer be charged more for having sick workers or for where they are located in the state. SB 125 does not allow rates to reflect the health status of employees or the geographical location of a company. They only factors that can be considered by insurers are the workforce's age, occupation and group size.



Some health insurers that recently entered the state have said they will leave if they are unable to set rates using the health status of employees, Murtagh said.



Sevigny said Fortis Insurance, Fortis Benefits, Trustmark, and John Alden testified in hearings that they intend to pull out if SB 125 passes.



At the same time, a New York-based insurer, MVP Health Care and one new startup insurer, Patriot Health Insurance Company in Bedford, testified they will still enter the state.



Eve H. Oyer, chief operating officer for Patriot, said the company favors the state getting rid of the health status rating system of workers because it will streamline the underwriting process.



Opponents to SB 125 are backing an amendment Francoeur has promised to introduce on the house floor Wednesday.



The amendment would allow insurers to continue to use employee health status as a rating factor. It would also reduce the amount employers will have to pay to fund a new high risk pool insurers will be able to use for very sick people with high medical costs. Under the amendment, employers would have to pay 60 cents per employee per month, instead of $1 a month under SB 125.



Supporters of SB 125 say the reinsurance pool will help protect insurers from crushing high costs, and make the state more attractive for smaller companies. Under this plan, workers would still have to fill out health forms after policies were written and premiums set so the insurers could identify who they want to designate for the risk pool.



If the House passes the SB 125 without amendment, it will go to the governor. If Lynch signs it, the law could go into effect Jan. 1, 2006. If the bill is amended, House and Senate conferees would need to work out the differences.



There is also another bill, HB611, which the Senate has amended to mirror SB 125. It also sets up an advisory committee to oversee the reforms after they are enacted.



Even if SB 125 does pass, its supporters suspect the debate over how to fix the rising costs of health care will continue to be a front burner issue.



St. Clair said, "I was just talking to someone on the street who said, 'This is probably going to be like school funding. We're going to come back and be talking about it again, again and again.' I would not be surprised that is the case."