Legislative Memo

Nick DuBray


A.9308-A (Morelle)



Rating of Individual and Small Group Health Insurance Contracts



June 14, 2006


The Business Council of New York State, Inc., a statewide association of more than 3,300 companies, chambers of commerce, and trade associations which employ more than one million individuals, has reviewed the aforementioned legislation and supports its enactment.

This bill would extend expired provisions in the insurance law that limit the premium differential for sole proprietors who purchase health insurance through chambers of commerce and other associations not to exceed one hundred fifteen percent of the rate established for the same coverage issued to traditional groups.

In 2002, the legislature took steps in attempting to mitigate a growing crisis in the small business community concerning health insurance. Access to affordable group-rated health insurance has become increasingly more scarce for the smallest of businesses - sole proprietors, and in 2002 the insurance law was amended to help these businesses by limiting the premium rate differential health insurers and HMO's could charge sole proprietors. That limit was set at twenty percent higher than the rate established for the same coverage issued to groups. This limit sunset on January 1st, 2006.

Since January 1, 2006, sole proprietors have been forced back into a health insurance environment where they don't know if they will see soaring rate increases that could jeopardize their ability to purchase health insurance or could force them to close their doors altogether. This legislation would extend the provisions from 2002 until December 31st, 2008 as well as reduce the limit by an additional five percent. Sole proprietors are not looking for preferential treatment, but rather to be treated the same as all other small businesses in the state.

The most important aspect of this legislation is that it will allow sole proprietors to continue to purchase health insurance. The failure to pass and extend this measure, could result in more sole proprietors forced to go uninsured or turn to government programs for insurance for themselves and their families.

For the abovementioned reasons, The Business Council strongly supports passage of A.9308-A.