Natural Entrepreneur: Health Insurance: So What's the Problem?

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Health Insurance: Treating the Problem

New governmental action is prescribed for the health insurance malady

by Sonia Pearsall, Advanced Benefit Design, Hillsboro, NH

Steps are being taken by the New Hampshire legislature intended to resuscitate the private insurance market in the state. In a previous article, I reviewed legislation in the mid-1990’s that, while well intentioned, resulted in the near collapse of the health insurance market in the New Hampshire, and severely limited the choices available to consumers. New rules are intended to remedy the earlier failed policy.

A major problem has been that individual insurance (not through an employer) was virtually unavailable for nearly ten years. In July 2002, Senate Bill 118 (SB 118) addressed this "individual insured" market, by re-introducing underwriting. Insurance companies can now deny coverage for people with pre-existing conditions or high health risk. Today there are four carriers in New Hampshire offering individual plans– American Republic, Fortis, Blue Direct, and Mutual of Omaha. SB 118 also established the NH High Risk Insurance Pool, which provides health coverage for those who do not qualify for individual coverage due to serious illness.

In January 2004, SB 110 was enacted into law. Under SB 110, insurance companies can again offer plans to NH small businesses of one to 50 employees that are more like standard plans available in other states. Again, underwriting is allowed, with the use of a two page Family Health Statement. Rates are now based on geographic location, standard industry code, age, and health status.

Under SB110, rates have also been reclassified to a 4-to-1 ratio. Prior to 1995, older plan members could pay as much as ten times that of younger adults, which was deemed unfair. With SB 711 rates were restricted to a range of no more than 2X, which resulted in the insurance companies fleeing the state. Today, SB 110 loosens this constraint.

And finally, in July 2003, Governor Benson signed Senate Bill 119, enacting a fair tort reform.

These legislative corrections represent good first steps in addressing the problems plaguing the health insurance market in New Hampshire. It is hoped that SB 110, in particular, will bring competition back to the state. However, so far, we have seen only two carriers return while numerous others remain in the background surveying the situation.

While these legislative remedies begin to take hold, I believe there are things we can do, as consumers, to help. Just like a part of our national energy policy must be a conscious awareness of conservation practices, similar behavioral changes might be called for in the utilization of medical services.

Years ago, I became alarmed at the number of people being treated for anxiety, overweight, lack of concentration, etc. I was concerned that low co-pays would cause people to over utilize health care services. Now, I am convinced that HMO’s have caused much of the irreversible breakdown of the health insurance industry. Because of low co-pays, more people visit the doctor, more people are diagnosed with something, more people return for follow-up visits, more medication, follow-up visits, complications from medications and the cycle goes around and around.

And the doctors say more tests are necessary or we shall be sued for negligence. And the lawyers say "I'm right behind you". And the commercials say "Try this drug and you will feel better". And the drug companies say "More money, please". And you say "Please, Mr. President/Candidate, help us", And he smiles and shakes your hand. And laws are passed that try to make everything "fair" but remove the competitive marketplace for insurance products. Imagine if that kind of thinking spills into your business. To drive costs down, government should encourage competition.

Sonia Pearsall is a partner in Advanced Benefit Design located in Hillsboro, New Hampshire. She has been licensed to sell life and health insurance in MA and NH since 1983. She specializes in working with individuals and small businesses to help them access reasonably priced benefits for themselves and their employees. She is a past president of The New Hampshire Association of Health Underwriters and The Massachusetts Association of Health Underwriters and a former participant in The NH Coalition for Better Health Insurance.Phone: 1-877-228-8138

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