What You Don't Have to Worry About!

Our client who was treated for breast cancer is the owner of a small business and buys health insurance for herself and her staff  through that business. With her treatment complete, she is looking forward to growing her business. However, she came to me with two big worries.  

Her first concern was “What’s going to happen to my premiums now that I’ve had breast cancer?” Fortunately, her business is in California, a state which passed some of the strongest protections in the country for small businesses way back in 1992. California has limited the amount insurance premiums can increase due to medical claims. These regulations stipulate that my client’s premiums can be set no higher than 10% above the standard rate. This is a very important protection; it ensures that no business is destroyed by radical increases in the cost of insurance due to an employee’s illness. My client can rest easy knowing that her coverage is protected and won’t become a burden to the business.

Businesses in other states are not so lucky; the average amount premiums are permitted to vary above standard is 25%--in states that have had small business reform.  In Pennsylvania and Virginia, there are no regulations on rating structures at all. That’s why you read horrifying newspaper articles about companies whose premiums have increased 50% or more due to a major health claim.

My client’s second question was “Am I locked into this plan forever?” Now that she has a preexisting condition, she wanted to know whether she will be able to change plans or insurance companies.  Again, California’s laws require that all businesses which meet certain basic requirements be guaranteed acceptance, regardless of the health issues of the employees.  And again, the new pricing can be no higher than 10% above standard rates. 

So the next question on your mind as the reader of this blog must be: “I’ve gotten rate increases that are more than 10% for more years than I can count.  And we didn’t have major claims!”  What reform in California has accomplished is limiting the variation in premiums between businesses--not the steep rise in premiums overall.  And this, of course, is the issue for all of us. The continued upward cost spiral must be addressed in national health reform.