{"id":2238,"date":"2010-03-08T18:12:09","date_gmt":"2010-03-08T22:12:09","guid":{"rendered":"http:\/\/www.nhteapartycoalition.org\/tea\/?p=2238"},"modified":"2010-05-19T16:48:36","modified_gmt":"2010-05-19T20:48:36","slug":"how-shaheen-destroyed-insurance-markets-in-nh","status":"publish","type":"post","link":"http:\/\/www.nhteapartycoalition.org\/tea\/2010\/03\/08\/how-shaheen-destroyed-insurance-markets-in-nh\/","title":{"rendered":"How Shaheen Destroyed Insurance Markets in NH"},"content":{"rendered":"

From the study Destroying Insurance Markets<\/a> [PDF 1.3MB] done by the Council for Affordable Health Insurance and The Heartland Institute. Please note the role Jeanne Shaheen, currently a NH US Senator, had in this.<\/p>\n

New Hampshire On January 1, 2004, key provisions of a reform measure aimed at deregulating New Hampshire\u2019s small group health insurance market went into effect. The new law also affirmed reforms implemented two years earlier to the Granite State\u2019s individual medical market, allowing insurers to refuse to write or issue coverage based on an applicant\u2019s health status, medical underwriting for individual health coverage, and exclusion of pre-existing conditions for nine months (up from three months under previous law). <\/p>\n

In testimony to the House Commerce Committee on April 23, 2003, Gov. Craig Benson (R) said, \u201cSB 110 is a great step forward in the health care reform process. It will lower costs and give consumers choice by increasing competition among insurers.\u201d <\/p>\n

How the Granite State came to see deregulation as the solution to the problems of rising health care costs and declining choices for consumers is a story worth telling, if only because policymakers in so many states still seem to think regulations are part of the solution rather than the cause of the problems. <\/p>\n

Biggest Insurer Cried for Help <\/strong><\/p>\n

Benson\u2019s \u201cgreat step forward\u201d could also be described as a \u201cgreat step backward,\u201d back to the time before the national debate over the failed Clinton Health Security Act and the poorly crafted reforms that New Hampshire and other states adopted in response to that debate. <\/p>\n

In 1993, Blue Cross Blue Shield (BCBS) of New Hampshire (acquired by Anthem in 1999) began suffering financially from the guaranteed issue and community rating practices it was required by law to adopt. BCBS was the \u201cinsurer of last resort\u201d in New Hampshire, and as such was more heavily regulated by the state than other insurers. In return, BCBS was exempted from paying the insurance premium tax (set at 2 percent of net premiums) levied on the rest of the state\u2019s private health insurance market. BCBS complained the guaranteed issue and community rating mandates made it unable to compete with firms permitted to use standard health insurance underwriting practices. Rather than seek freedom from the mandates, BCBS lobbied the New Hampshire Legislature to adopt rules that would force guaranteed issue and community rating on all state-regulated insurance companies. <\/p>\n

\u201cDespite having provider discounts no other carrier could match and favorable tax treatment to boot, BCBS was losing market share to other carriers,\u201d said Lee Tooman, vice president of Golden Rule Insurance Co. \u201cWhy? Because we had better products, prices and service. But Blue Cross prevailed in the Legislature, convincing elected officials that the problem was with us \u2018cherry pickers.\u2019\u201d <\/p>\n

During the 1994 legislative session, Democrat Jeanne Shaheen<\/strong>, then a state senator, responded to BCBS by sponsoring SB 711, which passed and went into effect January 1, 1995. Among other provisions affecting the state\u2019s insurance industry, the measure: <\/p>\n

– Required insurance companies to guarantee issue individual health insurance policies. Companies were prohibited from denying coverage to any person or eligible dependent;
\n– Imposed price controls, in the form of modified community rating, on individual health insurance premiums. Premiums could be modified or adjusted only for age, not health status; and
\n– Prohibited insurers from increasing premiums by more than 25 percent until January 2000.<\/p>\n

Individual Insurance Market Imploded<\/strong><\/p>\n

Aimed primarily at easing the burden on BCBS by encumbering other insurers, Shaheen\u2019s SB 711 had no positive effect for health insurance consumers. According to the U.S. Census Bureau: <\/p>\n

– In 1995, when SB 711 went into effect, 10.0 percent of the New Hampshire population was uninsured. In 2003, the uninsured rate stood at 10.3 percent;
\n– In 1995, 80.1 percent of the New Hampshire population had private health insurance. In 2003, 79.3 percent did; and
\n– In 1995, 9.8 percent of the New Hampshire population \u201cdirectly purchased\u201d health insurance, primarily in the individual market. In 2003, 7.1 percent did. <\/p>\n

While health insurance coverage was little affected by Shaheen\u2019s reforms, consumer choice was badly damaged. By 1997, the number of commercial health insurers serving New Hampshire dwindled to five from a previous high of 12. Those remaining in the market reduced their insurance offerings to cover only high-deductible, catastrophic-type health insurance plans. <\/p>\n

By 1997, even BCBS threatened to drop out of the individual health insurance market, complaining once again that its losses were unsustainable. The company followed through by quitting the state\u2019s market altogether and terminating all in-force business in January 1998. <\/p>\n

The announcement \u201cthat [BCBS] would no longer participate in the individual market that they had done so much to define, heightened the growing concern of the remaining five carriers,\u201d testified attorney Paula Rogers on behalf of the Health Insurance Association of America at a hearing before the state insurance department on October 31, 1997. <\/p>\n

\u201cSince the Blue Cross Blue Shield announcement, we have seen our number of new policies issued in New Hampshire increase substantially,\u201d testified Cecil Bykerk, executive vice president and chief actuary for Mutual of Omaha. \u201cWe have also seen a significant increase in our anticipated loss ratio and this appears directly related to the influx of former Blue Cross Blue Shield policyholders. Our individual block of business, and indeed the entire remaining individual market in New Hampshire, is not broad-based enough to Shield block of business.\u201d <\/p>\n

The New Hampshire Department of Insurance engaged the Washington, DC-based Center for Health Economics Research to investigate the effects of the Shaheen reform. The group\u2019s report, submitted on December 17, 1997, warned, \u201cBlue Cross and Blue Shield\u2019s withdrawal from the nongroup [i.e., individual] market could lead to a market collapse if nothing is done to avoid a disorderly migration of this high-risk book to other insurers.\u201d Anthony Juliano, executive vice president of the Independent Insurance Agents of New Hampshire (IIANH), shared at the October 31 hearing the results of an IIANH membership poll on the availability of individual health insurance products after SB 711 was implemented. According to Juliano, \u201cThere was a significant reduction in the availability, and what was available was coming in with extra-high deductibles. It now appears that circumstances have not changed and are certain to worsen with the withdrawal of BCBS from the market.\u201d <\/p>\n

Back to the Drawing Board<\/strong> <\/p>\n

On November 26, 1997, the Department of Insurance issued a \u201cFindings and Final Order\u201d with respect to the condition of the state\u2019s individual health insurance market. Insurance Commissioner Charles Blossom found, among other things, that \u201cthe quality of products available in this market is worsening,\u201d \u201cthe cost of available products in this market is increasing,\u201d and \u201cthe loss ratios of the writing carriers has increased.\u201d <\/p>\n

Blossom imposed a temporary risk-sharing plan, developed by the industry, to subsidize the losses experienced by the individual health insurance carriers. Insurers actively marketing in the individual market were eligible for a subsidy, paid for by assessments on all commercial insurance companies and HMOs. <\/p>\n

The plan was widely perceived as necessary, but acceptable only as an interim measure. William Sterling, vice president and senior associate counsel for group insurance carrier John Alden, testified at the October 31 hearing, \u201cThe inability of a guaranteed issue, community rated individual health market to provide a sufficient, internal spread of risk and cost is apparent. <\/p>\n

\u201cThe imposition of a risk-sharing plan by regulatory action is an acceptable and necessary solution to the problem at hand,\u201d noted Sterling. \u201cHowever, at the earliest possible opportunity, a permanent solution should be sought through legislation.\u201d <\/p>\n

Movement toward a legislative solution began in 1998. In legislation that went into effect July 1, 2002, the guaranteed issue requirement was repealed and a high-risk pool for the medically uninsurable launched. The measure also allowed for more flexibility in premium rating: <\/p>\n

– Insurers were permitted to use medical underwriting to determine eligibility for insurance coverage and initial determination of rates;
\n– Premiums could be surcharged up to 50 percent for health status; !Premiums could be surcharged up to 50 percent for smokers; and
\n– Premiums were permitted to vary for age by a factor of 4 to 1. <\/p>\n

The New Hampshire high-risk pool, New Hampshire Health Plan (NHHP), is a cooperative state and private-sector insurance plan for the medically uninsurable. While eligibility under certain state and federal regulations immediately makes one eligible for NHHP, for the most part, enrollees must have been declined for private health insurance coverage and must have been diagnosed with one of 16 \u201cpre-qualifying\u201d medical conditions, among them HIV\/AIDS, juvenile diabetes, multiple sclerosis and paraplegia\/quadriplegia. <\/p>\n

Two indemnity and two managed care options are offered through NHHP. Rates are higher for tobacco users than for those who do not use tobacco. Coverage is provided through private insurance companies at rates not higher than 150 percent, and not lower than 125 percent, of the standard market rate for the coverage offered. <\/p>\n

Scot Zajic, a director for government relations at Assurant Health, said his company is a strong supporter of high-risk pools for persons who cannot get health coverage elsewhere. \u201cHaving a risk pool is a good way to provide access to health coverage for those who need it,\u201d Zajic said. \u201cWe would, however, like to see the funding base broadened to include federal and\/or state funding. Finding coverage for medically uninsurable persons warrants a societal solution.\u201d <\/p>\n

State of the Market Today<\/strong><\/p>\n

Zajic said two companies under the Assurant corporate umbrella serve the individual medical insurance market today: Fortis Insurance Co. and John Alden Life Insurance Co. \u201cThe recent reforms have allowed us to re-enter the New Hampshire market, and to offer more products that will benefit more consumers.\u201d <\/p>\n

Golden Rule Insurance\u2019s Tooman disagreed with Zajic\u2019s assessment of competition in the state. \u201cIn 1994, Golden Rule had a thriving business in New Hampshire. We insured a lot of people and paid millions of dollars of claims expeditiously and accurately. But Blue Cross complained that carriers like Golden Rule were doing great harm in New Hampshire. In fact, the only entity suffering harm was Blue Cross.
\n
\n\u201cJeanne Shaheen\u2019s 1994 reforms ended up freeing Blue Cross of its money-losing business and handed it a virtual monopoly in the individual market,\u201d Tooman continued. \u201cBlue Cross returned to the individual market, able itself now to \u2018cherry pick.\u2019 But it still has the provider discounts no one else can touch. \u201cTen years after \u2018reform,\u2019\u201d he said, \u201cthe market has not recovered.\u201d<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

From the study Destroying Insurance Markets [PDF 1.3MB] done by the Council for Affordable Health Insurance and The Heartland Institute. Please note the role Jeanne Shaheen, currently a NH US Senator, had in this. New Hampshire On January 1, 2004, key provisions of a reform measure aimed at deregulating New Hampshire\u2019s small group health insurance […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,8],"tags":[],"class_list":["post-2238","post","type-post","status-publish","format-standard","hentry","category-news","category-articles"],"_links":{"self":[{"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/posts\/2238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/comments?post=2238"}],"version-history":[{"count":3,"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/posts\/2238\/revisions"}],"predecessor-version":[{"id":3672,"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/posts\/2238\/revisions\/3672"}],"wp:attachment":[{"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/media?parent=2238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/categories?post=2238"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.nhteapartycoalition.org\/tea\/wp-json\/wp\/v2\/tags?post=2238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}