Week Eight - February 29, 2008

The Advocate is a new electronic tool provided to our business members and regional state legislators.  This publication, sponsored by Devine Millimet & Branch and designed by ActiveEdge, is intended to keep you up to date with all the latest happenings in Concord concerning legislation impacting businesses.  We hope you enjoy this weekly electronic publication!

Before we get into this week’s edition of The Advocate, please note that our Chamber is hosting a special Legislative Dinner on March 26. This dinner is an opportunity for our Chamber members to dine and socialize with our region’s state legislators, and exchange opinions with them on various issues being debated at the State House. We hope you’ll take this opportunity to join us at this Dinner, and learn more about the Chamber’s advocacy work on your behalf while breaking bread with our state Senators and Representatives. The dinner will be held at The Crowne Plaza Hotel on March 26, starting at 5pm. Tickets are $65, and can be purchased online by visiting www.nashuachamber.com.

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The Legislature was on vacation this week, along with all the school kids, so there wasn’t any action on which to report in this week’s edition of The Advocate.

With that said, this week’s edition takes some time to focus on a particular initiative that Governor John Lynch hopes to successfully launch later this session. The Governor calls this initiative a “wellness plan” for small businesses, and it is intended to provide lower health care costs for small business owners throughout New Hampshire.

The bill in which this initiative is contained, SB 391, has not yet received its first formal hearing, but it is expected to draw a lot of attention due to some of its proposed controversial elements. The Chamber has not yet taken a formal position on this bill, but we feel it is important to share with you the highlights and potential impacts of this legislation should it pass as currently drafted. The following information was received by us in meetings with the Governor’s staff and the Commissioner of the Department of Insurance, as well as in meetings with representatives from Harvard Pilgrim and Anthem Blue Cross/Blue Shield.

A brief overview of the language for SB 391

SB 391 aims to require insurance carriers to provide an insurance product to the small employer market (1-50 employees). The central feature of this bill (and perhaps the most controversial) is that the product’s base rate premium will be fixed at 10% of the state’s median income. The coverages have not yet been determined. A committee will be created to review the product and set those coverages. This committee would be composed (as listed currently) of small business people, insurance brokers, the commissioner as chair, etc...  There are currently no representatives of the insurance providers on this proposed committee.

The intent of the bill, according the Governor’s office:

To allow small group employers to have access to the same benefit programs (wellness programs, etc.) as larger employers. The belief is that, currently, only large employers receive the wellness and chronic disease programs such as health fairs, screenings, and diabetic care management from the insurance providers because their size allows this ‘attention’ to be paid to the large employer. The theory is that the small employer is then not encouraging or participating in wellness programs or chronic disease programs. If they were, then the cost to deliver health care would decrease for their market segment because wellness, prevention, and disease management would be encouraged. They are stating clearly that they want the encouragement to be lower premiums. Hence, these groups would be incentivized to participate in wellness efforts – smoking cessation, exercise, screenings, and disease management. Reduced premiums as a result of available programs and incentives through participation is the primary goal of this initiative.

Health carriers emphasize that, contrary to the Governor’s belief, wellness and disease management programs are actually already offered to all group sizes in NH.  These programs are not tailored based on the size of the group.  The only wellness program that may be exclusively offered to large groups is the "trade-fair" wellness programs where a large employer offers screenings on-site during the workday.

Key questions and answers to consider in relation to this bill:

Q: What is the average premium in the state currently?

A: The answer is $325 for individual coverage through an employer group policy.

Q: What is the state’s current median income, and thereby the premium being suggested as base rate?

A: $263 for individual coverage through an employer group policy, based on the median annual salary of $31, 560.

Q: Is this a base rate premium or an actual premium?

A: Base rate is defined as the premium amount before the insurance companies adjust for certain permitted criteria, such as industry. The $263 quoted above is the base rate. Therefore the true premium would be adjusted by the permitted criteria (maximum adjustment from this base rate is 3.5:1).

Q: What happens if a small employer group purchases this product (however it is eventually defined), and then they do not participate in a wellness plans? Will the premiums remain the same? Will their own premium change?

A: No definitive answer to this question was received. The general consensus was that the committee which will set the package definition/coverages.

Q: What is the expected product definition or coverages?

A: Unknown – this will be determined when the committee meets (which would only be after the legislation is passed). They were looking at the ‘most popular products’ in this group market as a guide for definition.

Q: What will be the additional administrative costs to the insurance companies? Have they measured the effect this program will have on the insurance carriers? If the insurance carriers must carry additional burden administratively, and yet product pricing is being fixed at 10% of state median income, the remaining increased cost to the insurance carriers would likely be passed along to the other products/group markets. This is known as cost-shifting. What is the potential effect?

A: We have not received a solid answer to this question, which gives us cause for concern. The fact that the state government would mandate what a private insurer must provide, and then mandate the cost at which it must be provided, also gives us cause for concern from a philosophical perspective.

J. Christopher Williams
President & CEO
Greater Nashua Chamber of Commerce
151 Main St.
Nashua, NH 03060
Phone: 603.881.8333
Fax: 603.881.7323