The New York State Insurance Department is investigating whether insurance policies for sole proprietors are priced too high. The department says there are indications that the rates may be justified to move toward small groups.
That’s instead of being more closely aligned with individual, direct-pay coverage, as they are today. Chambers of commerce are involved in the issue because many of their members rely on the groups to buy insurance. Chambers around the state have watched insurers walk away from a market that many say is too risk-filled to be profitable.
The result, say many chamber officials, is that small-business growth is stifled because owners cannot get coverage. Part of the reason for the problem is that several existing restrictions in state insurance law make it risky for insurers to cover groups of one. For example, pre-existing conditions cannot be excluded, and coverage takes effect immediately after signup.
Also, there are no stipulations about how long a person must stay enrolled. A new insurance package called Healthy New York obligates insurers to cover at least some sole proprietors. Under this package, small businesses that have not offered coverage in the past year can sign on to the plan, which is essentially a basic health insurance package.
The plan currently excludes people with insurance, but some are trying to convince the state Legislature to open the plan to those with coverage, perhaps by removing the state subsidy from the rates those people would pay.
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