Insurance rates
worry small business

Owners wonder if a proposed
regulation will lower health
premiums or create paperwork

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By Lyn Danninger
ldanninger@starbulletin.com

In the end, small business owners just want to know if a proposed state law requiring more transparency in health insurance rates will save them money or just create more intrusive government paperwork.

The law, which would require insurers to disclose to the state the actuarial basis for their rates, is backed by state Insurance Commissioner Wayne Metcalf and opposed by health insurers.

More than two dozen business owners had plenty of questions yesterday, mostly relating to any cost savings, for panelists at a health care forum sponsored by the Chamber of Commerce of Hawaii Small Business Council. The panelists were state Insurance Commissioner Wayne Metcalf, Hawaii Medical Service Association Vice President Jim Walsh and Hawaii Independent Physicians Association Executive Director Bill Donohue.

Insurers and their supporters contend that HB 1761 would only add to a growing number of regulations with which they already comply. Further, they say, there is no evidence that the law would reduce premiums.

Walsh said the HMSA recognized the plight of small businesses, but it doesn't believe further regulation is the answer. While rising health care costs are a big concern, rate regulation will not fix that problem, he said.

"It's the wrong alternative based on the wrong information at the wrong time," Walsh said.

But the insurance commissioner contends the additional information is not what he already receives from insurers. That information relates mostly to matters of financial solvency.

Metcalf said that while he could not guarantee lower premiums, as has been the case in auto and worker's compensation insurance since similar legislation was passed, businesses could at least be assured that what they are being charged by insurers has been reviewed by "a second set of eyes."

In a state that requires employers to pay health insurance, Metcalf said, "there has to be protection against excessive rates."

Bev Harbin, small business advocate for the Chamber noted that for many businesses, health care premiums and increases have for years been considered inevitable.

"Health care premiums are an issue sort of like death and taxes -- something you don't have any control over," she said.

But given Hawaii's long recession and the downturn in the economy since Sept. 11, the issue finally seems to have attracted the Legislature's attention, she said.

"I think small businesses are feeling more empowered," she said. "We decided to get some answers."

Hawaii IPA's Bill Donohue said his group of 450 physicians -- all small business owners -- would have viewed the proposed legislation with concern if it involved that state setting rates.

"But that's not what this bill is about," he said. "It's a rate review bill to make sure rates are not excessive, inadequate or unfairly discriminatory."

"I would consider it a modest proposal," he said.

Small business owners also asked if such regulation would encourage competition in Hawaii's shrinking health insurer market.

Insurers believe there is no evidence that the bill would encourage competition. Metcalf disagrees.

"It would provide a floor against inadequate rates and protect against predatory pricing," he said.

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