Health Insurance Rates: Does the State Definition of Small Groups Hurt Nonprofits?

The following perspective piece is in response to a recent article in New York Nonprofit Media. It first appeared on NYCON’s website

Leaders of New York's small and mid-sized nonprofits are concerned about health insurance premiums. As well they should be. Nonprofit executive directors struggle annually with rate increases and benefit changes. There is no discounting the level of frustration and confusion many nonprofit leaders feel when faced with the daunting task of "open enrollment."

According to recent commentary in the New York Nonprofit Media, New York State nonprofits were harmed when the State decided to redefine the small group health insurance market to be 1 to 100. The article noted that many nonprofits will now have to pay more for health insurance and will have less choice in the market. As the founder and leader of an insurance brokerage firm working exclusively with nonprofits for nearly 20 years, and currently representing over 1,000 New York State nonprofits, I am still waiting to see a nonprofit harmed by this.

To the contrary, I have seen significant rate reductions, and more choice, than under the prior small group definition.

If you work regularly with the nonprofit sector you tend to notice that nonprofit employees tend to be (mostly) female. Demographically, females tend live longer than males (lower mortality), but also tend to have higher instances of sickness and disability (higher morbidity.) For this reason, any nonprofit that employs mostly females will automatically tend to be looked at unfavorably when it comes to health insurance.

Mark Silvanic, executive director of two Head Start organizations in the Southern Tier, noted, "Gaining a (small group) community rating has been a benefit. ... The fact that Head Start is primarily made up of staff that are 'woman of child bearing age'  is a fact that cannot be discounted.  The community rating eliminates this factor, allowing for lower rates." Mark's one agency dipped below 50 staff in 2015, allowing his agency access to the community rate one year prior to New York state redefining small group as 1 to 100. His agency saw their rates go down 13.7 percent as a result of this move.

In 2016, the community rate for the same plan was still lower than the rate he was paying as a large group in 2014. That's two years of premium reductions and no changes to the benefits of the plan. Mark's other Head Start agency made the move to small group in 2016 and also saw similar savings.

In Albany, another nonprofit did opt to renew early for 2016, as the previous article indicated, but not to avoid devastating premium and benefit changes. The existing carrier proposed no increase (0 percent) to incentivize them to stay for one more year. It is interesting to note that all community rates effective January 1, 2016 were actually lower than what the existing carrier was offering, even at a 0 percent increase! The timing of changes to move to another carrier, coupled with a rate-hold offered, prompted them to renew early. We are now looking at community rates for 2017, and again, they are lower than the rates they were paying in 2015. Again, two years of rate savings, with no change in benefits.

In addition to lower costs, we have also seen increased choice of carrier options. Insurance carriers are not required to offer quotes to any large group they deem as "demographically unfavorable."

When working to get other quotes, many times we receive a response from a carrier that they feel they cannot be competitive with the current carrier's rates and simply say no to offering a quote. I find this very hypocritical. Insurance carriers are always trying to differentiate themselves in the market, afraid of being "spreadsheeted" alongside their competitors. They feel that this only boils the decision down to price comparing. They stress the importance of their customer service, network choice and national quality awards they've won. They recommend employers and employees not make health insurance decisions based only on price. If they truly believed in this principle, they would not simply walk away from offering a nonprofit a quote based only the thought that they might be a little higher in cost. Yet that is what they do. They see the ages and genders (the demographics) working for the nonprofit and quickly decide they don't want that as a part of their pool of insureds.

With a community rating pool of 1 to 100, all community-rated employers have access to all carriers' plans and rates offered by the carriers in their "community." No need to hope your census is one that is preferable in order to get a quote. No more demographic "cherry picking."

An employer of over 100 staff not only has the necessary size in the marketplace, but also will have a chance at high enough enrollment for accurate experience rating. A nonprofit with only 60 staff may only have 20 to 25 staff enrolled, and that is simply not enough to apply large group underwriting principles. The community rate defined at 1 to 100 works for nonprofits, and maybe even other sectors as well.

 

Peter Andrew is President and CEO of Council Services Plus, a member of the NYCON Family of Services. Peter has nearly 25 years of experience in the insurance industry and is a past President of the Northeastern New York chapter of the National Association of Health Underwriters (NAHU), and previously served on the NYSAHU Board of Directors. Peter also currently serves on the Board of Directors for Nonprofit Risk Management Center based in Leesburg, VA.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.