New Hampshire Frees Small-Group Health Rates

NU Online News Service, July 1, 2003, 5:52 p.m. EDT – New Hampshire Gov. Craig Benson, a Republican, has signed S.B. 110, a bill that gives health insurers some flexibility in setting rates for small employers in his state.

New Hampshire adopted a community-rating law in 1994. That law required insurers operating in the state to offer all small groups in a community the same rate.

Supporters argued that the law prevented health insurers from pricing coverage out of reach of employers with sick employees. But critics said the law chased insurers from the New Hampshire small-group market, by driving up their claims costs.

S.B. 110, which was introduced by Sen. Russell Prescott, R-Kingston, N.H., establishes one set of rules for employers with one to 50 employees and a second set of rules for employers with 51 to 100 employees.

S.B. 110 lets health insurers consider employees’ age, health status and tobacco use when setting rates for groups with 50 or fewer employees.

Health insurers can now charge up to four times as much for older employees, and they can charge up to 50% more for sicker employees.

Health insurers can add 20% for very small groups, 30% for “groups of one,” 20% for a group in an industry with high claims, 15% based on location and 25% to reflect a group’s claims experience.

When a health insurer sets a rate for an employer with 51 to 100 employees, it must calculate the rate using a weighted average calculation consisting of the group’s experience and the carrier’s large employer group pool experience.

“The weight used for the group’s experience shall be no more than 25% and the weight used for the experience of the carrier’s large employer group pool shall be a minimum of 75%,” according to the bill text.