FOR IMMEDIATE RELEASE

RISING COSTS A BARRIER TO HEALTH COVERAGE FOR SMALL BUSINESS
NAIC Supports Adoption of Federal Legislation That Will Make Small Employer Coverage More Stable

WASHINGTON, D.C. (Nov. 3, 2009) — Lower profit margins, the downturn in the economy and significant premium increases are among the reasons why small business employers have more difficulty than larger competitors affording insurance coverage for their workforce, according to the National Association of Insurance Commissioners (NAIC).

Testifying before the Senate Committee on Health, Education, Labor and Pensions, Kansas Insurance Commissioner Sandy Praeger said state regulators support reforms that make small employer coverage more stable.

“The reality is that the cost and utilization of health care is rising rapidly, and insurance companies have little ability to address these issues,” said Praeger, who is Chair of the NAIC Health Insurance and Managed Care Committee.  “Rates will continue to rise, and unless spending is brought under control, all state and federal reforms will shift the financial burden from one group to another without solving the underlying problem.”

“The challenge moving forward,” Praeger continued, “will be to overhaul the delivery system to promote prevention, quality, and results-based care to encourage healthy lifestyles and to eliminate waste and fraud in the system. The difficulties in the small group market, as in the individual market, are ultimately the result of medical spending that has outstripped the ability of most Americans to pay for it.”

Praeger also noted that more immediate transitional steps may be necessary to significantly reduce premiums in the coming years. “Subsidies, reinsurance, funding for high-risk pools and reducing cost-shifting from federal programs and the uninsured are a few things that could be considered.” 

Click HERE to view Commissioner Praeger’s testimony.

Click HERE to hear audio from Commissioner Praeger.

About the NAIC

Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org.

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