Relates to establishing the small business insurance pool

Summary of specific provisions

Section 1 amends Sections 4315, 4352, and 4353 of the Insurance Law to authorize the establishment of a Small Business Insurance Board (SBIB). The SBIB would consist of five members, one appointment by the Governor,and one appointment by Majority and Minority party of each house. The SBIB will be tasked with hiring the appropriate staff necessary to carry out the functions of negotiating with insurance companies. In particular, the Board will hire an Adminis- trator who will oversee and lead in all negotiations with insurance companies: The SBIS will be able to enter into contracts with insurance carriers to provide health insurance benefits to eligible employees. The Section also defines eligible small businesses as those with between one and 100 employees.

Section 2 adds Section 97-iiii to the State Finance Law to establish a Small Business Insurance Pool Fund. The Fund will consist of monies received from surcharges paid by participating small businesses. These funds will be specifically used to cover the administrative costs of the Small Businesses Insurance Pool Program and will not be commingled with any other funds.

Section 3 establishes the effective date of January 1, 2009.

Effects of present law which this bill would alter

Amends Sections 4315, 4352, and 4353 of the Insurance Law and adds Section 97-iiii to the State Finance Law.

Justification

Purchasing alliances continue to be at the forefront of health policy. President Clinton's 1998-99 budget included $100 million over five years to aid states in developing alliances for firms, with one to 50 employees. The Patients' Bill of Rights Plus Act of 1999 called for the creation of "Health Marts" to provide multiple options from which employees of small firms could choose. One of the largest problems small businesses face is their inability to bargain for less expensive insurance for their employees. With the rising costs of health insurance, small business employees are particularly hurt by increases in health insurance premiums - 5% of all small firms surveyed in a 2004 national study by the Kaiser Family Foundation said they were very or somewhat likely to drop health insurance coverage over the next year. In 2001, over 95% of the firms in New York State employed fewer than 100 employees, comprising 37% of the State work force. Due to their inabili- ty to pool large groups of employees in order to lower premiums, it is in general more expensive for small business employers to offer the same

health insurance coverage as their larger counterparts. Not only do employees in small businesses pay more in premiums, but they also paid 69% more in premiums in 2004 than they did in 2000, while those in busi- nesses with 100 or greater employees saw their premiums increase by 31%.

This blistering increase can be attributed both to the overall rate of health insurance inflation and, perhaps more importantly, to employers in small businesses passing an increasing proportion of health insurance premiums onto their employees. It is important to note that, although their offered plans are more expensive, employers (not costs) are the primary limiting factor in whether or not small business employees have coverage: only 49% of firms with fewer than 100 employees offered access to employer-sponsored health coverage, compared with 72% of those firms with 100 or more workers. Overall, we can see that all the evidence supports the claim that employees working in small businesses have a harder time getting and keeping their health insurance coverage. This bill attempts to rectify this problem by creating a small business insurance pool, negotiated and administered by the State. The State would negotiate HMO and other types of plans and make them available for all small businesses and their employees, regardless of income.

Prior legislative history

A.9036 of 2006. A2364a of 2007-2008 -Referred to Small Business

Fiscal implications

Approximately $1 million for initial startup costs- to support personal and nonpersonal services.

Effective date

Immediately