September 04, 2003
An Important Notice Regarding Your Health Insurance
Recently, all individuals insured in the Association's sponsored health insurance program received a letter from the Association's broker, USI Colburn, regarding the issue of demographic rating in the setting of health insurance premiums. This letter was recently followed up with one directly from Independence Blue Cross addressing the same concern. All other insurance carriers in Pennsylvania are already using demographic rating, with the lone holdout in the Delaware Valley being Independence Blue Cross, the carrier of the Association program.
Presently IBC's programs are community rated. In setting premiums, the loss experience of every group of 99 participants or less is pooled, thereby balancing the good risk of healthy individuals in all the groups against the experience of the not so healthy in all the groups. Demographic rating eliminates this concept. Instead, categories are formed based on sex and age and separate rates are set for those categories. Thus an employer's policy premium will depend on the demographics of his or her specific employee group. As an insured, unless you work with a lot of men who are under 35 you are going to be upset.
Under demographic rating, groups with women under the age of 40 and/or men over the age of 50 could be looking at very significant increases in their health insurance premiums starting in January of 2004. Separate premiums will be set for employers which will depend on an employee census, i.e. how many women under 40, men under 35 and men over 50 an employer has. Men over 50 watch out! You could be in the best health of your entire life, but your age will result in your employer's premium going up. Likewise coverage for another male lawyer in your same firm under 35, even though he may have hypertension and a heart condition will help to lower your employer's premium. Perhaps most insulting and offensive is the demographic assumption that all women under 40 are going to have a child. Never mind that you might not want a child, already have as many as you wish, or realistically see that becoming a mother is very far off in the future. The assumption is being made that because of your age and sex you are going to cost a carrier more than a man under 35. As they age out of child-bearing years, women will also be hit with higher premiums because they are simply getting older.
Although Independence Blue Cross is against this type of rating structure, it is already losing contracts to other carriers who are using the structure and thus taking all the "good risk" from the community rated pool. As a result, IBC feels it also has to institute demographic rating even though it doesn't want to.
Obviously the question is, if IBC is against demographic rating what is it doing about it? IBC has sponsored Senate Bill 671 as well as House Bill 1891 and House Bill 1892. The bills prohibit demographic rating in setting health insurance premiums for small employers.
However, winning passage of these bills is an uphill battle and the lobbyists for private carriers and even other Blue Cross programs in the state (who are able to offer lower premiums to those groups weighted with younger men and women over 40) have been hard at work lobbying against passage of these bills.
What has your Association done about this situation so far? Our Chancellor Audrey Talley has already provided written testimony against demographic rating. You can read the full text of her testimony before the Senate and Banking Insurance Committee on June 16, 2003 by clicking HERE. Communications to those legislators who are supporting SB 671 and HB 1891 and 1892 will also be made. Our lobbyist in Harrisburg is meeting with those whose votes are crucial on these bills to let them know what the Association's position is. However, the Association doesn't have a vote in the next election. YOU DO! It is important for you to let your legislators know, by e-mail, phone, fax or mail, that you are against demographic rating and in favor of these bills which prohibit it. Suggested language for such a written communication follows:
As one of your constituents I want you to know that I am against demographic rating in the setting of health insurance premiums for groups of under 100 participants, and ask that you fully support the passage of (SB 671) / (HB1891 /1892). Demographic rating will have a discriminatory impact on women under 40 and men over 50 and could result in the loss of health insurance for many employees of small businesses.