MEMORANDUM IN OPPOSITION

90 State Street Suite 825 Albany, NY 12207-1717 518.462.2293 Fax: 518.462.2150 www.nyhpa.org

FOR IMMEDIATE RELEASE: April 19, 2013 Re: S.4526 (Hannon) A.6519 (Silver) AN ACT to amend the insurance law, in relation to creating the freelancers health plan demonstration program; and providing for the repeal of such provision upon expiration thereof.

This legislation, S.4526/A.6519, creates a new exception from the community rating law and a favored treatment for a single organization the Freelancers Union to be able to offer experience rated insurance products. The New York Health Plan Association (HPA) opposes this legislation because the exception to the community rating requirements proposed in this bill would have a detrimental impact on the new Health Benefit Exchange and the community rated market as a whole. HPA also opposes the legislation because it advantages one and only one health plan while disadvantaging both individuals and small employers who are not afforded this added benefit. Community rating uses the same premium rates for a specific pool of individuals without considering each persons medical conditions and cost experience, thereby spreading the costs of different medical conditions across a broad cross section of the community. Experience rating uses a defined groups history of claims to calculate premium rates. Current New York law only allows large group employers, those with more than fifty employees, to participate in experience rating. Freelancers, by definition, are independent workers. In this case, these individuals buy their health insurance through the Freelancers Insurance Company established by the Freelancers Union. Neither freelancers individually nor the Freelancers Union is a large employer. This legislation would create a disparity for sole proprietors and small employers who purchase their insurance through local chambers of commerce and other business organizations, as well as individuals who participate in the community rated pool. Community rating serves a very important role in ensuring that health insurance is affordable and accessible to the individual market and small group market by spreading the risk of high cost medical conditions across a large number of individuals and small groups. It is also a vital component for coverage that will be available to individuals and small businesses through New Yorks Health Benefit Exchange. Under this proposal the Freelancers Union would be exempt from the various taxes imposed by the federal Affordable Care Act, thereby increasing the burden of those taxes on small businesses and sole proprietors who remain in the small group and individual community rated pool. Granting the Freelancers Union the opportunity to use more favorable experience rating would come at the expense of those participating in the community rated pool. This type of cost shifting will clearly result in increased costs for individuals and small employers who remain in community rated market or enter those pools through the Exchange. It would result in a serious imbalance that unfairly hurts local chambers of commerce, small business organizations, small employers and individuals all for the benefit of the Freelancers Union. Accordingly, HPA opposes S.4526/A.6519. If the legislature were to adopt this type of legislation, then it would be only fair to extend the same right to other associations, chambers of commerce and small business organizations.
The New York Health Plan Association represents 23 managed care health plans that provide comprehensive health care services to nearly 7 million New Yorkers.