Ohio Insurers Pick Small Business' Pockets In The Name Of "Shared Responsibility"

Here's a cautionary tale which shows how small business loses when health care reform and politics meet.

While most eyes are on Washington's ongoing health care reform debate, Ohio insurers have reportedly incorporated a provision into the new State budget which will allow them to pick small business' pockets in the name of "shared responsibility."

The Cleveland Plain Dealer reported on July 14th that the Ohio Department of Insurance has "quietly, behind the scenes, been lobbying for key insurance mandates."

One of those mandates would require insurers selling plans in Ohio to enable families to carry dependents on their health plans through age 28, whether or not they live at home. Fair enough, and plan costs will be adjusted so the new provision pays for itself through premiums.

The second mandate is a doozy. It seeks to create a subsidy for participants in Ohio's "open enrollment" plan, through which individuals with severe health conditions which make them "uninsurable" in the conventional market, and who can afford to pay, can obtain some sort of health coverage.

Because these folks are generally sick,the premiums charged to open enrollment participants are steep. The PD says they average $800 per month, but that means they're considerably higher for some plan participants.

So needless to say, not many Ohioans participate in the "open enrollment" program. Currently, only about 1,300 Ohioans are signed up.

Now Ohio insurers, who are by their own admission making tons of money selling individual health plans, want to encourage more Ohioans to participate in the open enrollment plan. How? By creating a subsidy that will reduce open enrollment premiums to an average of $400 per month.

Where will the money come from? The provision gives Ohio insurers the ability to raise premiums for other insurance plans...including, especially, the insurance plans offered by Ohio's small businesses...by up to 5%.

An official from Medical Mutual Of Ohio says, "It's shared responsibility, and that's what needs to happen."

So let's do some math: 1,300 Ohioans currently pay $800 per month for their insurance coverage. Over a year, that comes to $12,480,000.

In exchange for a 50% subsidy ($6,240,000), insurers get to raise your premiums by as much as 5%.

Let's assume for a moment that the COSE health plan is about a $500 million health plan (no one outside the COSE inner circle knows for sure, cuz COSE's not tellin'). That 5% "tax" comes out to $25 million on the COSE plan alone.

So Ohio insurers have found a way to create a new pile of money for themselves...which small employers will pay for...to cover a subsidy for a tiny number of individuals with serious health conditions, so that insurers can direct a few more of them to a plan they operate.

This won't affect large employer plans, which are self-insured, or government plans, either. The cost will fall on everybody else who buys coverage through Ohio insurance companies.

Far as I can tell, this provision sneaked into the budget with no hearings or public comment.

Where are the intrepid watchdogs who are supposedly looking out for the interests of small business in the legislature? Undoubtedly congratulating themselves for getting to see President Obama when he came to town...