NYS Healthcare Regulations Driving Out Insurers-Obamacare Precursor




New York has let loose the precursor to Obamacare – price control, rate control, limited choice, reduced competition, unsustainable benefits, and more power in the hands of fewer people. As costs rise, insurance companies are being regulated into keeping rates the same. The government’s goal it to be the single payer eventually so they can use their uncontrolled power over the taxpayer purse to enact their socialist agenda. That is the creeping NYS health insurance and it is what the rest of the country will have soon.

Empire Blue Cross Blue Shield confirmed that on April 1, 2012 they will eliminate most of its small group plans in NY and will slash financial incentives to brokers to sell those plans. They say they will offer fewer PPO, HOM and EPO plans but claim they will not withdraw from the market. Empire’s departure follows Cigna, HealthNet and several others. The product they are dropping insures two-thirds of NY businesses.

Brokers say, not true, they are withdrawing since they (Empire) are in effect removing the competitive programs and keeping the ones that are not competitive. In addition, the new fee for brokers has been reduced from a 4% commission to a $5 per contract per month basis, and frankly, no one will work for that.

Empire says they can not sustain the losses from the small group plan market. Their withdrawal is probably due to rejections of their rate requests. NYS has made regulatory changes while costs of medical care have risen and Empire can’t turn a profit. As small businesses have dropped out, they (Empire) have been left with more and more enrollees who are sicker and higher risk, without the healthier people to counterbalance this. They have tried to work with the problem for the last four years and cannot make it work, they say.

Craig I. Hasday, the legislative chair of the New York State Association of Health Underwriters, the professional trade association representing health insurance brokers and employee benefits consultants, in a phone interview on Friday morning said, “It’s incredibly destabilizing and it will drive the cost of insurance up, because without competition, obviously, the incentive for insurance companies to keep rates down is significantly depressed, and it will also limit choice for the consumer.”

Officers of New York State Association of Health Underwriters wrote a letter stating, “The major carrier’s pending withdrawal from the small group market is nothing short of catastrophic to small employers in the state. Multiple small employers with literally tens of thousands of employees are going to be left without coverage, as there will be only two to three other carriers left in which brokers may try to place coverage. If the other carriers follow suit, the availability of coverage will dry up entirely.”

The problems, according to the underwriters, stem from two provisions: One requires insurance companies to get approval from the State Insurance Department before changing any rates. The other requirement is that an insurance company can only spend a certain percentage of premiums for non-claim costs.

This is the future under Obamacare which pairs unsustainable benefits with stringent rate control. The goal is government single payer, socialism. Health insurance companies, which were demonized last year for enormous profits, only had a 2% to 4% profit margin, with few exceptions, and that is not a lot in a capitalist economy, but it is a lot in a statist economy, which is what we are becoming.