N.H. Gov. Lynch Signs Big Changes for Small Group Health into Law

July 7, 2005

Surrounded by supporters, Gov. John Lynch this week signed into law a bill that promises to dramatically change the way health insurance companies set rates for small businesses in New Hampshire.

Lynch said he was satisfied the new law eliminates what he considered to be the most damaging aspects of the old insurance law.

“It repeals the most onerous provisions of SB 110,” said Lynch, referring to the law governing health insurance for businesses with 50 or fewer employees. “It takes away the ability of insurance companies to discriminate against companies and small businesses based on health and geography, so that is a real significant assistance and help to our small businesses.”

State Sen. Ted Gatsas, R-Manchester, called the new law the first of three steps responding to the rising cost of health care.

“The next leg is to find a way to get the uninsured insured, and the third leg is to make sure that we have all consumers understanding what they’re doing with health care,” he said.

He said work is being done on legislation to be introduced in the next session that would offer some form of catastrophic health insurance to cover hospital visits for uninsured people.

“I think that’s the most important part so that we stop the cost shifting from the uninsured to the insured,” Gatsas said. “Some of the pieces are starting to fall in place … but you have to have a clear understanding of how you’re doing it, and not just having a situation that anybody decides to drop health care with a company because they can get onto the uninsured list.”

The law signed this week takes effect Jan. 1, 2006. Under it, insurers can no longer set premiums based on a business’ location or the health of its workers. It limits premium increases to no more than 20 percent a year, with exceptions for inflation, and sets up a pool that all companies contribute to for people with high medical costs.

It continues to allow insurers to consider employees’ age and the type of industry to set rates.

Critics said the compromise would push insurers out of New
Hampshire and increase premiums. But state Sen. Maggie Hassan, D-Exeter, said the insurers that would leave New Hampshire because of the new regulations only created competition for the healthiest, most low-risk groups.

She acknowledged young and healthy groups whose insurance rates dropped under the old law likely would see their insurance costs rise, but not drastically.

“The people who got huge decreases under 110 won’t be whiplashed all the way back up to the other side,” she said. “Hopefully it won’t be the kind of 200 percent increase that the older and sicker groups were seeing last time.”

Lynch spoke of repealing the law during his campaign; he repeated the promise at his inauguration in January. The following month, Lynch announced he’d forged a compromise with a bipartisan group of state senators. The compromise passed the Senate last spring; it passed the House early last month.

Supporters of the old law argued it would attract more insurers to New Hampshire, lowering rates through competition. They said it had already succeeded in bringing some companies to the state and needed more time to take root.

But many small business owners and employees complained it gave
insurance companies too much leeway, causing rates to shoot up for
employees with poor health and in areas where health care costs are
higher, like the Seacoast and North Country.

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