Record Health Care Rate Hikes For Small Biz In 2010 Questioned

Congressmember Joseph Crowley. Health insurance premiums for private insurance plans covering small businesses are set to increase by 15 percent next year, with potentially harmful consequences, and 119 members of Congress want an explanation for the sharp rate increases.

Congressmember Joseph Crowley and two U.S. senators, who spearheaded a letter from the 119 lawmakers to the private health insurance company owners, said in a release: “Some healthcare experts are alleging that the insurance industry is raising rates artificially in anticipation of the enactment of federal healthcare reform and not as a result of underlying increases in costs.”

But the anticipated 15 percent increase, which would be double the increase imposed for 2009, will surely have “negative consequences” for the small businesses that pay for their employees’ health care.

Crowley (D–Queens/The Bronx) and Senators Dick Durbin (D–Illinois) and Mary Landrieu (D–Louisiana) said in their letter to Karen Ignagini, president and CEO of America’s Health Insurance Plans (AHIP): “We read with great concern the Oct. 24, 2009 New York Times article, ‘Small Businesses Face Sharp Rise in Costs of Health Care.’ The article raises serious allegations about whether insurance companies are raising rates in anticipation of health reform being enacted by President Obama and Congress.

“Small businesses and hardworking Americans deserve to know why they will be subjected to such unusual and significant increases in healthcare premiums and we ask that you submit to Congress a detailed explanation of the planned rate hikes.”

The lawmakers said that the 15 percent reported increase “means the annual premium per employee will have risen from $4,500 in 2008 to $5,500 in 2010—an increase of $1,000 per employee in just two years.”

The letter went on to call small businesses “the backbone of the U.S. economy, accounting for approximately 80 percent of net new jobs created and during the current economic downturn cannot be expected to absorb such skyrocketing costs without negative consequences for job creation and business growth”.

Crowley and his two senate colleagues pointed out that the number of employers providing insurance to their workforce is slipping, with the percentage of businesses with fewer than 10 workers offering health care dropping from 56 to 46 percent over the last 10 years. If the same pattern continues, the lawmakers pointed out, businesses large and small “will have to choose between reducing benefits or making layoffs” if they are to stay competitive with foreign companies.

“Without healthcare reform, small employers are on track to pay nearly $2.4 trillion for health care in the next 10 years. As a result, one in five employers is expected to stop offering health benefits within the next five years. The employer-sponsored health insurance of millions of employees and their families is at stake.”

The letter concluded: “U.S. businesses and hardworking Americans are struggling enough to make ends meet. Clearly, they cannot afford baseless premium hikes. That is why it is so important for you to explain the cause for these premium hikes. We look forward to your response and getting to the bottom of this issue.