Small New Hampshire Businesses Consider Purchasing Alliances to Control Health Care Costs

While New Hampshire has passed a law allowing small businesses to form "purchasing alliances" to buy "bulk" health care insurance, no firm has "commit[ted] itself" to the alliance, Granite News/Foster's Daily Democrat reports. The Insurance Department adopted interim rules on purchasing alliances that took effect on Feb 1., but businesses are hesitant to join the pool before final rules take effect. Purchasing alliances are not always effective at lowering rates or attracting insurers, especially in smaller states, Granite News/Foster's Daily Democrat reports. Similar programs have had "greater success" in California and Florida, but the pools did not improve the "quality of care" or increase choice for employers in Utah, and the pools even "flop[ped]" in North Carolina. However, unlike the plan in North Carolina, New Hampshire's guidelines for purchasing pools have community rating where insurers have the same price structure for groups of similar size. This prevents the pool from becoming an insurance option of "last resort," as companies with an employee with a preexisting condition may be subject to "dramatic surcharges" without the pricing guidelines. In North Carolina, insurers "steered" healthy groups outside the alliance, "leaving the sickest groups inside." Even with the rating system in place, New Hampshire may have a difficult time launching a purchasing alliance, as state rules require anyone organizing an alliance to present a "detailed business plan," which may necessitate determining how many businesses would participate. The state's purchasing alliance rules also require that employers offer two or more carriers, but New Hampshire's small size makes it difficult to attract insurers and many carriers have left the state. To help attract insurers, some businesses advocate "roll[ing] back" the rating system to allow groups with preexisting conditions into an assigned risk pool. While that would increase rates for the preexisting condition group, it would "lower most other rates." Mike Foy, CFO of Foy Insurance, said, "If we can attract some carriers back in the state, maybe purchasing alliances will make sense." Lisa Stanely, the owner of Wit-Way supply company, which covers 100% of its workers' premiums, said, "[R]ather than just forming an alliance, we should find out why we don't have competition in this state. Market forces control prices. What we need are choices. That's what's going to bring prices down" (Sanders, Granite News/Foster's Daily Democrat, 3/21).