NJ Insurance Commissioner Calls on Menendez and Lautenberg to
         Stop Federal Preemption of NJ State Law

(TRENTON):  Commissioner Steven M. Goldman of the NJ Department of Banking and Insurance today called on New Jersey Senators Frank Lautenberg and Robert Menendez to oppose a bill that would have a major effect on the cost of health insurance to small employers.

The Enzi-Nelson Small Group Health Bill (The Health Insurance Marketplace Modernization and Affordability Act of 2005, S-1955) would allow professional and business associations to form small business health plans whose rating systems are exempt from stricter home state regulation.

The rating systems set forth in the bill “will devastate New Jersey’s small employer group insurance market,” said Goldman.  New Jersey’s current rating system requires modified community rating and allows no more than a 2 to 1 differential between the lowest-rated group and the highest-rated group. Even with proposed amendments narrowing the rating band, the federal legislation would permit up to a 5 to 1 difference between the highest and lowest-rated groups.

“Small New Jersey employers with older or sicker employees would see dramatic rate increases under the federal proposal, effectively driving them from the insured market and leaving the most vulnerable citizens without adequate health coverage,” Goldman said in a March 24 letter. 

Goldman also highlighted a May 5 letter that Governor Jon S. Corzine and 11 other governors sent to US Senate Majority Leader Frist and Minority Leader Reid urging them to reject the legislation as “a step backwards” in the effort to provide “affordable and meaningful healthcare for all Americans.”  In their letter, Corzine and the other governors stated their many concerns about the legislation including that “…despite the intent of S. 1955 to make health insurance more affordable, the bill will likely make it harder for many small businesses to provide health coverage to their workers.” Corzine and the other governors declared that, “this legislation’s preemption of premium protections, basic benefit, and solvency protections (as well as the increased legal burden on states) will inevitably place greater stress on the nation’s health care safety net.”

Attorney General Zulima Farber, joining 40 state attorneys general, also wrote to the Senators to urge them to oppose S.1955, which will eliminate “strong state protections in exchange for weak federal oversight.”  These protections include internal appeal procedures, benefit mandates, market conduct reviews, and prompt payment of claims. 

Goldman pointed out that at the end of 2005 more than 919,000 individuals were insured in New Jersey’s small group market, an increase of more than 225,000 since 1994.   The State’s rate of uninsured remains slightly below the national average and the percentage of small employers offering coverage is higher than the national average.  “These statistics are proof that the New Jersey small group market is flourishing due in large measure to our ability to regulate the market by state law.”

Goldman continued: “One of the priorities of Governor Corzine and this Department is to increase the accessibility and affordability of health insurance.  If enacted in its present form, the Enzi-Nelson bill would significantly diminish the opportunity for New Jersey to craft State-specific solutions to the issues that exist in the overall health care market in the state. I urge our Senators to stop the attempted preemption of state regulation of the health insurance market by the Federal government.” 

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