The Business Council opposes this legislation, which exempts from community rating requirements group health insurance policies issued to multiple employer trusts consisting of municipal corporations and public benefit corporations. This exemption would allow municipalities with 50 or fewer employees to join multiple employer trusts that are experience rated, threatening to undermine the integrity of the community rated pool and raise costs for the small businesses and sole proprietors that remain in community rated plans.
As the cost of health care and health coverage continues to rise, the burden on New York's employers – particularly small businesses – and their workers is getting heavier, and it is hurting New York's economic growth and competitiveness. That only about 50 percent of the state's small businesses offer coverage to their workers illustrates how acute the affordability problem is for small businesses, which make up almost 75 percent of The Business Council's membership.
By facilitating what amounts to a carve-out of small municipal employers from community rating, the exemption in the legislation potentially creates two classes of small employers – municipalities and all others – and in the process undermines the intent of community rating, which is to spread the risk of high cost medical conditions across a large number of individuals within the same area.
The legislation creates an environment for adverse selection, whereby the large groups within a trust would seek the participation of healthier, small groups, diluting the community rated pool of healthier risks. In addition, it would be permissible for the trust to shed the small groups with poor experience back into the community rated pool, negatively impacting those community rated employers that had been left in the pool.
Solutions to the rising cost of employee healthcare are needed, particularly for small businesses, and The Business Council is committed to working with state lawmakers and other stakeholders to identify the right mix of innovative solutions and flexible products. However, fragmenting the community rated pool as proposed in S.8225-A / A.11176-A should not be part of it.
We respectfully urge that S.8225-A / A.11176-A be rejected.