Health insurance bill kills community rating

After a 90-minute floor debate, the New Hampshire House earlier this month voted 280-89 to pass Senate Bill 125, a measure pushed by Gov. John Lynch that undoes most of the touted reforms of SB 110, a measure that has been widely criticized as provoking double- and triple-digit increases in small-business health insurance premiums.

But the real fight was over a floor amendment that failed 217-151. Supporters of the amendment — including a minority of the House Commerce Committee — said it would have removed flaws in current law, SB 110. Opponents said the amendment would have gutted reforms crucial to SB 125.

SB 125 — most of which would take effect Jan. 1, 2006 — is meant to relieve the rate pressure on small businesses under SB 110, a controversial law enacted in 2003. That bill got rid of community rating and allowed insurers to charge much more for groups with sick and elderly workers.

Rep. Tom Buco, D-Conway, called the vote – including the House’s decision to keep the Senate’s wording in the bill and avoid a conference committee – “a big win for the governor.”

But Rep. Bob Introne, R-Londonderry, voted for the amendment, saying “SB 125 is an attempt to fix the problems in 110, but it runs the risk of making things worse than they are now,” Introne said, who predicted, “We’ll see this issue back on the table next year.”

Rep. Jack Dowd, R-Derry, a businessman, said his insurance premiums have soared and that if SB 110 “hasn’t worked in two years, it’s time to change.”

By all accounts, groups of between one and nine subscribers have seen the worst of the squeeze. To help them, SB 125 repeals geographic and health status rating factors and sets up a nonprofit corporation to reinsure the riskiest members of a group after the premium is set using other rating factors, such as ages of workers and size of group.

The amendment would have eliminated this high-risk pool.

SB 125 also limits the highest premiums a carrier can charge to 3.5 times as much as the lowest premiums. Today that range is 12 to 1. The amendment would have made it 4 to 1.

Rep. Fred King, R-Colebrook, agreed that getting rid of geographic rating would help sparsely populated areas like Grafton and Coos counties, but he voiced doubts about the reinsurance pool.

“Repealing SB 110 was not the right thing,” he said.

The proposed high-risk pool will cost a carrier five times its average premium per reinsured individual. This ante is capped at $30,000 per year. The insurer also would eat the first $5,000 in medical costs as a deductible. Alternately, the carrier can reinsure a whole small group for just 1.5 times the customary premium.

Rep. Mike Whalley, R-Alton, thought the state was beginning to see the benefits of SB 110 and said, “Small businessmen like me will face even greater problems paying insurance benefits. Carriers say they will leave the state because of this bill. I take them at their word.”

Critics of SB 125 predicted a new wave of rate instability, resulting in turning some of the winners under SB 110 – it’s estimated that about a third of small businesses saw premium rates drop under SB 110 — into losers.

Rep. Gene Chandler, R-Bartlett, feared an exodus of New Hampshire carriers.

“I hope I’m wrong,” he said, “but a lot of businesses will see rate increases. The amendment would have fixed the problems in 110.”

But Rep. James Pilliod, R-Belmont, said the sponsors of SB 110 made specious promises.

“This year’s bill may increase some rates, but it will stabilize them over time,” Pilliod said.

Taxpayers hit?

One businessman on hand for the vote was Bob King, CEO of Goal QPC in Salem, who called SB 110 a failed experiment that never spread risk and made the sick pay more.

He had scathing criticism for SB 125 too, deeming it a Band-Aid approach to the real issue. His solution is getting high-risk patients to eat well, get exercise and check their blood sugar and blood pressure.

“Eighty-five percent of those people are not practicing good self-care,” King said.

Opponents of SB 125 warned it makes all insurers pay a small assessment on each of 600,000 subscribers statewide to beef up the payment nest egg and spread the risk. That feature would cost the state an extra $250,000 a year to insure more than 10,000 state employees, the Office of Legislative Budget Assistant said, and the extra cost would grow to $500,000 by 2009.

Local taxpayers would absorb a similar hit.

Rep. Marshall Quandt, R-Exeter, fought for SB 125 in committee, saying hospitals reported the legislation would help insure more people. That wider coverage would ease the pressure on hospitals to give millions in free care.

Rep. Howard Dickinson, R-Center Conway, said the people behind the amendment were the same folks who spearheaded SB 110. He confessed voting for SB 110 himself two years ago, calling his decision a terrible mistake.

“That’s very apparent now,” Dickinson said.