Bill would open state health plan to businesses

Rep. Jill Schaefer Hammond learned to appreciate the state employees’ health insurance plan firsthand after her premiums, as a self-employed freelance graphic designer, rose 35 percent. She had just lost a major client and was forced to drop coverage for a year.

But as a state representative, Hammond was able to buy into the state employees’ plan. The premiums aren’t cheap — $534 for individual HMO and $1,710 for a family HMO — but the premiums aren’t based on her age and accelerate as she got older, and a 10 percent surcharge would be charged because she is a sole proprietor. And the coverage — preventive care, low deductibles and low co-pays — made it a better deal than anything she was going to find on the private market.

“If I could get it, why shouldn’t any small business be able to get it?” asked Hammond.

And that is the essence of House Bill 617, the bill Hammond is introducing this session.

The idea of allowing businesses or individuals to buy in to government health-care plans was popularized during the last campaign, when every Democratic candidate – including President Obama – endorsed the idea of allowing Americans to buy into the same health plan federal employees have.

Now that idea is being proposed at state houses all over the country. None has passed yet, according to Alex Feldvebel, New Hampshire’s deputy insurance commissioner, so if the Granite State moves ahead with it, it could be another first.

Thus far, no one is actively opposing Hammond’s bill. They are raising questions, but they appear to be real questions, not “concerns” that are really thinly veiled objections.

Not ‘affordable’

HB 617 merely adds 187 words to existing law. Under the measure, a small business – defined as a business with between one and 50 employees – could simply buy in to the plan the way a state legislator does. Pricing of the premiums would be left up to the state Department of Administrative Services, which currently manages the state’s self-funded health insurance plan through Anthem.

Under the bill, no business would have to participate, and there would be no subsidy for those that do.

Such a plan would not be for everybody, Hammond freely admits, and is certainly not the “affordable” coverage that many small businesses are looking for. And it simply wouldn’t make sense for larger small businesses that were able to negotiate a lower rate.

But the premiums are competitive with those paid by small groups with older workers, especially those in dangerous occupations. Such plans have such high deductibles that many employees who have coverage avoid primary care, Hammond said.

With all of her money being spent on insurance, she couldn’t afford to go through a $5,000 deductible before the insurance started kicking in.

“I was paying so much for my health insurance, I couldn’t afford to use it,” she said.

Those that follow Hammond’s example, and drop coverage altogether, end up in situations that could drive them into bankruptcy. This drives the cost of health care even higher.

She called her bill “a Band-Aid that helps keep some people in the system,” she said.

Is it a Band-Aid that will work?

First, the cost of the bill is not known. The Department of Administrative Services has been unable to come up with a figure on its fiscal note.

One key question, said Feldvebel, is what impact the bill would have on the state pool. If those seeking out more comprehensive coverage tend to be older and sicker, wouldn’t that raise the cost of coverage to the state, and therefore the taxpayer?

“I’m not saying that it would, but that’s a matter for analysis,” said Feldvebel.

And would that mean that the state plan would end up being less affordable to buy in to than it is now?

Hammond said that the state employee pool is already older and sicker than most employee pools “because many people are hanging on to state jobs because of their health benefits.”

Besides, she said, residents already subsidize the coverage of the uninsured, as hospitals shift the cost of unreimbursed care onto other payers, which in turn increases premium.

‘Pretty rich benefit’

David Juvet, a vice president of the state Business and Industry Association of New Hampshire, also wants to know how much this would cost.

“It’s a pretty rich benefit,” he said.

He also questioned whether the plan would offer the same kind of protections and mandates passed by the Legislature in recent years precisely to extend coverage to small businesses.

For instance, lawmakers recently passed laws that would extend family coverage to divorced spouses and to all adult children up to age 26 living in the state. But self-insured plans are regulated by the federal government and not the state, so the state doesn’t have to obey its own laws (and doesn’t).

So if the state plan does include small businesses, would it have to abide by the laws, at least those for small businesses that are being covered? Would there basically be a two-tiered premium structure? Hammond said she thinks not, but wasn’t quite sure, saying it was a “murky” part of the law. She said, however, that cost protections would be “negligible” and the state should just do it on its own.

Then there is the question of how the policy would be sold. While the bill doesn’t address this, Hammond said she envisions that employers would buy it directly from the state, just as state employees do.

“I want to cut out the middle man, the bureaucracy, and make it as simple as possible,” Hammond said.

That would be a major bone of contention for the Independent Insurance Agents and Brokers of New Hampshire, which represents such middle men.

“If it is going to cut out the individual agent, then we are against it,” said Robert Nash, president of the organization.

But if the agents could offer it, he said, “we are always in favor of as many options as possible for small businesses.”

Bob Sanders can be reached at bsanders@nhbr.com.