Close Close

Life Health > Health Insurance

New Hampshire Frees Small-Group Health Rates

Your article was successfully shared with the contacts you provided.

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.

S.B. 110 also gives all New Hampshire employers with at least 50 employees enrolled in their group health plans a right to get specific plan loss information from their carriers.

Another section of the bill lets New Hampshire health insurers reject individual applicants because of health problems, but it requires insurers to offer a price to all small-group applicants.

New Hampshire operates a high risk pool for some sick residents who must buy coverage through the individual market. Health insurers that reject individual applicants who have health problems must let rejected applicants know about the high risk pool, according to the S.B. 110 text.

Benson has been a strong supporter of S.B. 110.

“This is a bill that lowers health care costs and improves quality of care by increasing competition in the insurance industry,” Benson said in a statement in June, shortly after the House passed the bill and sent it to his desk.

One out-of-state insurer, Fortis Health, Milwaukee, a unit of Fortis, Brussels, reacted immediately to the signing of S.B. 110 by announcing that it will return to the state’s small-group market in 2004.

“Passing S.B. 110 is a win for New Hampshire consumers because it will help bring back a competitive small employer health insurance market and restore choice to small businesses in the state,” Tom Brophy, a senior vice president at Fortis Health, says in a statement about the signing of the bill.

Fortis Health left New Hampshire in 1998.

The text of S.B. 110 is on the Web at