PA House to vote on rate protection for small business

Health insurance rate protections enjoyed by employers in 48 other states are moving through the Pennsylvania House of Representatives. House Bill 746, authored by Rep. Tony DeLuca (Allegheny County), is expected to be brought to the House floor for final passage soon.

In a June 22 vote by the full House, the members voted along party lines in favor of the bill.  However, because the majority caucus did not have its full contingent present, the total "yes" votes (97) was less than needed for passage (102).  The full House is expected to take up the bill again within the next week, perhaps as early as Wednesday, June 24. 

Opponents of the bill include the Pennsylvania Insurance Federation and the National Federation of Independent Businesses.

The rate protections in the bill include:

•  A base rate reflecting an insurer's regional experience for each of 7 geographic areas, rating bands that may not vary by more than 2:1 from top to bottom, and variation within those bands based on age and wellness programming in the workplace.

• A prohibition against medical underwriting and gender-based discrimination.

• No rate increase by more than 10 percent in any one year. 

• A requirement that all small group health plans sold in the state meet the minimums established by a standard plan defined by the Insurance Commission.

• At least 85 percent of premium dollars would need to be paid out in medical benefits; in other words, the insurance companies could not retain more than 15 percent for internal administrative costs and profit.

These rate protections would apply to any carrier with at least 1 percent market share in the small group market.

In a June 22nd letter to House members, PHAN joined around 20 other organizations in urging an affirmative vote on HB 746.  The letter stated:

"The rate protections contained in this bill would spread the cost of medical care more broadly and thereby make the cost of that care more manageable.     

"Furthermore, the rate protections in HB 746 would bring greater stability and predictability to the market, qualities badly needed by the many smaller employers who want to provide coverage for their employees.  Without this legislation, these employers will be left with no way to anticipate and plan for the costs of coverage; they will continue the jeopardy of annual rate spikes that have driven many to drop coverage entirely.

"While this bill will not directly impact the cost of medical care, it will enable more employers to provide coverage for their employees.  This is very much in the public interest as coverage translates into better health, more peace of mind, greater productivity, fewer bankruptcies, and lower public costs for uncompensated care. 

"Moreover, by ending the current practice of medical underwriting, HB 746 will enable older and partially disabled employees to consider job changes without fear that a prospective employer will view them as driving up his/her cost of insurance."

A copy of the letter with the names of endorsing organizations is attached. 

Letter to members - HB 746.doc