Bar News - July 8, 2005
Why Thereís No Association Health Plan
Many Association members contact the Bar Center asking why the Bar or the NHBA Insurance Agency does not offer a discount on health insurance as a member benefit.
"It has not been from a lack of trying," said NHBA Executive Director Jeannine L. McCoy, who, in conjunction with members of the Board and with Sue Morand of the NHBA Insurance Agency, has investigated a number of options for offering an association health plan or benefit to members. "We have encountered regulatory roadblocks and, in some cases, offerings that would not be priced as competitively as what our members could obtain by dealing directly with carriers."
In fact, that was the situation that existed when the NHBA Board of Governors voted to disband the Health Insurance Group agreement it had with Blue Cross and Blue Shield 10 years ago. According to a Bar News article from March 15, 1995, the Bar Association group had experienced substantial premium increases averaging 30 percent. Additionally, regulatory changes enacted that year resulted in the insurance company no longer having the negotiating room to offer discounts to the association plan.
Currently, state regulations do not allow "association plans" consisting of separate small employers to band together to purchase insurance as a large group. Attorney Leslie Ludtke of the NH Insurance Department said allowing multiple employers to obtain insurance as a large group can lead to segmentation of the general market for insurance, which drives up costs for the employers obtaining insurance on their own.
Even if new association plans were allowed (several plans of other associations formed prior to 1995, which did not disband, are still in existence), Ludtke said members might be disappointed in the results. Thatís because employer groups that are expensive typically opt into purchasing groups since they can obtain a better rate from the group. This drives up the premium rates for those in the association group. Ludtke said those not familiar with insurance often overvalue the importance of economies of scale. "Even if you have many members in your group, carriers are not necessarily interested. Carriers donít care about volume, they care about risk," Ludtke said. If the insurance company does not have reason to believe the pool of covered lives is going to be healthier than average, they arenít going to offer a very good price, she explained.
McCoy said the Bar Association recognizes that its members are looking for guidance in obtaining health insurance and it will continue its efforts to look for innovative approaches that would help members address this important area of law office management.
In future issues, the Bar News will discuss Health Savings Accounts and offer tips on purchasing or managing health insurance benefits.