SB 110: a few winners, many losers

In redefining New Hampshire’s small-group health-care market from one to 100 lives down to one to 50 lives and by introducing medical underwriting, New Hampshire has not only shot itself in the foot, but is now reloading.

We have violated one of the basic principles of GROUP insurance, which is to create the largest pool of insured lives possible over which to spread the risk. Group insurance, unlike individual insurance, looks to raise the premiums a little across the greatest population so that no one group of people may be singled out and dealt a disproportionate rate increase.

With Senate Bill 110, only 10 percent of the small-group market has received a decrease year to date, while 31 percent of the groups have received “normal” renewals, ranging from 1 percent to 19 percent, and a whopping 59 percent of small groups have been battered with increases ranging from 20 percent to 241 percent, according to the New Hampshire Insurance Department.

This is a gross violation of the very reason we buy health insurance in the first place: to pay into a system so that when we need it the most the system will be there for us. SB 110 has resulted in a few “winners” and many “losers.” Even the “winners” need to watch their pennies, for it is inevitable that some day they, and or their families, will be struck by an unsuspected illness or accident. And while their savings may run on a temporary short dollar today, the “winners” will be actually paying for the “losers” via cost-shifting.

Cost-shifting will result from physicians and hospitals no longer able to absorb bad debt and uncompensated care, a knee-jerk reaction by the workers’ comp market as a result of higher medical insurance deductibles and premiums and the strain on our local and state resources such as Medicaid, social services agencies, the underinsured and the uninsured. The “winners” will be absorbing these non-tangible costs and will subsidize all of the aforementioned. So, are they really winning? No. Is this a temporary Band-Aid on cancer? Yes.

Employers offer group benefits to keep and attract key employees; employee benefits is the No. 2 line item in any employer’s budget behind payroll. Now employers must look more critically at those very employees who have served them well the longest, those who have contributed into the system the most, and those who are part of our aging workforce.

New employees may not be hired based on the merit of education and experience, but most probably based on their potential to impact group rates.

Neither medical underwriting nor increased competition will impact our rising premium costs. Even so, competition has not responded to our open gates; and, at best, simply offer varying plan designs.

According to the New Hampshire Department of Insurance’s August 2004 report, 82 percent of 2003 total premium dollars went to the raw cost of medical care. Oddly enough, the very same 82 percent was attributable to the raw cost of medical care back in 1993. The remaining 12 percent of the premium dollar goes to cover the expense of administration, premium taxes and profit. All we are seeing is our small employers scrambling to maintain a plan as best they can but raising deductibles and shifting premium costs to the employee, all increasing employee out-of-pockets.

SB 110 has proven that radical and liberal reform is not in order. Conservative and incremental adjustments will be necessary to correct an already stressed market. The rising cost of the health-care delivery system is not due to the big bad hospitals gouging our citizens. They too have to make a profit. It is not due to the big bad insurance companies, they are only financial intermediaries, and they too need to make a profit. Would you want to be with either a medical provider or insurance carrier that is losing money? We’ve been there, and it is not pretty.

Consumers have rejected managed care, yet we demand the highest quality, the most advanced technology, and we want it now. So what do we do? Is there more we can do to engage the consumer? Absolutely. Education and proper data will help us all make better and informed decisions revolving around our own family’s healthcare needs. Today we have neither. We need to visit the cost of prescriptions, over-utilization of benefits, and the costs associated with defensive medicine.

Most importantly, we need to vote for those who are on the ballot that have promised to cooperate, commiserate and collaborate for the better good of their voting constituents. Health care is not a political issue. We need a bipartisan effort to correct the mess SB 110 has initiated.

Your power in your vote. Speak loud and clear that SB 110, as written, is not in the best interests of our small group market. It has failed in all of its promises, and it does not support New Hampshire’s entrepreneurial spirit.

Greta M. Cocco is president of First Benefits Inc. and past president of the New Hampshire Association of Health Underwriters.