On behalf of our member companies that make NJBIA the largest, most impactful association representing business in New Jersey, and specifically employers with 50 or less employees that are eligible “small employers” for purposes of health insurance coverage, we support A-3972, which makes certain changes to the calculation of minimum loss ratio (MLR) requirements for health benefits plans in the individual and small employer markets.
We thank the sponsors of this legislation for their thoughtful and deliberate consideration in putting forth legislation that we believe will greatly help small businesses.
Strengthen Small Group Market Competitiveness
It is imperative that the insured small group market is competitive among carriers, provides options for our members, and provides the right incentives to encourage insurers to provide affordable, valued coverage.
While MLR requirements are well-intended, New Jersey’s MLR rules are inconsistent with federal law and the laws of many other states, and the New Jersey method creates incentives that do not serve consumers well. With this proposal to match at the federal level, insurance carriers now have an incentive to invest in quality improvement programs and small businesses can take advantage of these new patient-centered care initiatives to better the overall health of employees.
Reduce Volatile Rate Changes
Smoother rates changes are important for small businesses because it leads to more predictability and budgeting and less volatility and uncertainty in pricing over time. The proposal to calculate the loss ratio based on a three-year span will allow carriers to better understand trends and make more accurate predictions regarding future rate changes, as insurance rates are less likely to erratically fluctuate over a three-year span versus a one-year span.
When insurance carriers can evaluate rates over a longer period of time, carriers can better evaluate the risk profile and adjust rates accordingly. For small businesses, this
can mean more tailored and competitive health insurance options. Because small businesses need to plan for the long-term, having access to insurance rates over a three-year span gives them a clearer picture to better anticipate future rate changes.
More Benefits, Same Standards
If enacted, A3972 will improve incentives for carriers while still holding carriers to standards that exceed existing federal requirements, due to the treatment of some existing taxes under the equation.
NJBIA thanks you all for your support of A-3972. Please free to email me at aford@njbia.org if you have any questions about our support for this or any piece of legislation.
