Lower profit margins, the downturn in the economy and significant premium increases are among the reasons small business employers have more difficulty than larger competitors affording insurance coverage for their workforce, according to the National Association of Insurance Commissioners (NAIC).
Testifying before the Senate Committee on Health, Education, Labor and Pensions, Kansas Insurance Commissioner Sandy Praeger said state regulators support reforms that make small employer coverage more stable.
“The reality is that the cost and utilization of health care is rising rapidly, and insurance companies have little ability to address these issues,” said Praeger, who is chair of the NAIC Health Insurance and Managed Care Committee. “Rates will continue to rise, and unless spending is brought under control, all state and federal reforms will shift the financial burden from one group to another without solving the underlying problem.”
“The challenge moving forward,” Praeger said, “will be to overhaul the delivery system to promote prevention, quality, and results-based care to encourage healthy lifestyles and to eliminate waste and fraud in the system. The difficulties in the small group market, as in the individual market, are ultimately the result of medical spending that has outstripped the ability of most Americans to pay for it.”
Praeger said that more immediate transitional steps may be necessary to significantly reduce premiums in the coming years. “Subsidies, reinsurance, funding for high-risk pools and reducing cost-shifting from federal programs and the uninsured are a few things that could be considered,” she said.
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