Federal health care bill could affect state’s small businesses

(April 13, 2006) The U.S. Senate’s Health, Education, Labor and Pensions Committee has approved a controversial bill that would undermine Connecticut’s beneficial small-case reform laws in an effort to allow employers to group together across state lines when purchasing health insurance.

Known as the Health Insurance Marketplace Modernization and Affordability Act, the legislation would permit small-business health plans to purchase health care that avoids state insurance rating requirements and safeguards, if the plans also offer certain alternative coverage.

But allowing plans to operate outside of the state’s carefully crafted small- group rating laws would enable small- business health plans to cherry-pick the best risks, harming the rest of the small group market. This would have a potentially devastating impact on the small- group marketplace in Connecticut.

CBIA strongly supports maintaining the integrity of Connecticut’s small-case reform laws because they restored stability to a once volatile marketplace that saw massive increases in premiums for certain small-employer groups.

Connecticut’s current system prohibits insurance carriers from basing their premiums on such factors as the overall health of the group or its claims experience. By allowing plans to operate outside of these safeguards, this proposal would make Connecticut’s small employers vulnerable to the unpredictable premium increases they experienced before the state’s reforms were enacted.

The bill now will go before the entire Senate chamber and will likely have to be worked out with the House of Representatives as well.

For more information, contact CBIA’s Eric George at 860-244-1900 or georgee@cbia.com.