If House Speaker Chris Donovan has his way small businesses will be allowed to join the state employees health insurance pool by the end of next year.
A bill introduced by Donovan would allow small employers with fewer than 50 employees, including self-employed individuals, to purchase health insurance through the state employee plan.
It’s a concept Donovan has been pushing for the past few years now.
Last year, Donovan was successful in getting a bill passed that allowed municipalities and nonprofits to join the state health insurance plan. This year he just wants to take the concept a step further by allowing small businesses to join.
“Why not offer that opportunity to small businesses as well?” Donovan said Monday. “Let’s offer small businesses an affordable plan. If they choose to join that’s an option they can have.”
The legislation, which has been endorsed by Rep. Robert Megna and Sen. Joseph Crisco, the two chairmen of the Insurance and Real Estate Committee, also eliminates insurers’ ability to adjust small group premiums based on age, gender, occupation or group size. And it would require insurers to offer policies to small businesses that decide to join together with professional organizations to receive a premium quote based on the group.
Eric George, associate counsel for the Connecticut Business & Industry Association, said he’s concerned about the changes the law would make to the small employer rating system.
He said removing gender and age as factors for determining what these groups pay for premiums could make rates for younger people go up. He said if that happens those younger employees are more likely to get out of the small group market and buy a plan in the individual market leaving the older and more sickly population in the small group pool. Ultimately that would increase the costs because the risk would be much greater and since it’s a self-insured plan it’s possible the taxpayer would be on the hook for these decisions, George said.
“The bill has its heart in the right place, but what it seeks to do has unintended consequences,” he said.
Megna disagreed there was any risk to creating adverse selection.
He said the process for joining the state employees health insurance pool is “so strict and fine tuned that it allows the Comptroller and SEBAC to really carefully make that decision.”
As for the rating system, Megna said they are hoping it takes out the volatility for some small businesses that have older employees.
“We’re exploring that,” Megna said. “It could be a positive.”
Donovan touted the success of opening up to state employees pool to municipalities.
No municipalities have joined the pool yet, but the rating process that gives them the ability to join has been completed. Nonprofits aren’t allowed to join until Jan. 2013 and the benefit plan they receive won’t be exactly the same plan as the one offered to state employees.
State Comptroller Kevin Lembo told the Insurance and Real Estate Committee that his office is in the beginning stages of enrolling municipalities in the plan. He said he’s still struggling with designing the benefit plan for nonprofits.
“Our analysis has so far revealed that more than 50 municipal groups tested would save money through the CT Partnership Plan – with at least 30 percent of those saving more than 5 percent,” Lembo said.
State Health Care Advocate Victoria Veltri said her office sees more small businesses coming in year, after year complaining about their rate increases, which often times are in the double-digits.
“What they really need to ensure their business’ economic viability and provide health care to their employees is some assurance over time that the rates are going to stay stable,” Veltri said.
While she lent her support to the bill, she couldn’t bring herself to endorse the changes to the rating system.
“In an ideal world I think that would be a wonderful way to go,” Veltri said.
She said it could lead to higher premiums for younger people.
“I think it’s the ideal, but I’m not sure we’ll ever get there completely,” Veltri said. “I just don’t know if that makes for an affordable product.”