Health Insurance Premiums for Small Business Owners: House Bill 87 and Senate Bill 27.

Montana is one of three states without rate review authority for health insurance premiums. My premiums are increasing 20% per year, one year, 39%.

"Open for discussion or your input to the legislators during this 2013 legislative session (on-going). Evidently, MT has launched an app to follow bills (for $1.99). But legislators can be found here:
http://leg.mt.gov/css/find%20a%20legislator.asp.

Health insurance is my largest monthly expense, other than payroll. Why? There is little competition in the health insurance market in MT. For example, BCBS MT was subject to a US Department of Justice action, which was settled in 2011.

For a little insight: "These anticompetitive effects would have been exacerbated by a provision in the parties’ agreement that requires Blue Cross to give the hospital owners two seats on Blue Cross’ board of directors if the hospitals do not compete with Blue Cross in the sale of commercial health insurance, the department [DOJ] said."

The PPACA ("Obamacare") is complex and rolling out over several years. For better or worse, states must make choices and take action. In this regard, Montana has fallen well behind. The every-other-year legislative sessions are likely to exacerbate the situation, to the detriment of small business owners.

In a battle of small business owners and the insurance lobby, there is little doubt that the latter has the upper hand and benefits from the infrequent sessions. Two bills are pending for the 2013 legislative session dealing with health insurance: House Bill 87 (2013) proposes rate review authority for the Commissioner of Securities and Insurance (CSI) as to health insurance premiums; and Senate Bill 27 (2013) increases the number of employees for small business owners to be covered under "Insure Montana".

It appears that HB 87 will actually allow the commissioner to refuse "low-ball" premiums, for example, low compared to those inflated by monopoly rent pricing. SB 27 does not go far enough, it should raise the $75,000 cap for eligibility for small businesses. The only other hope on the horizon for small business owners may be Montana Co-Op. However, when it becomes operational, it may very well be of little use and subject to the "low-ball" review. Monopoly players seem to be locking in monopoly rent pricing, which may force new entrants to "maintain" elevated prices. Further, the recent "fiscal cliff" bill left out funding for co-ops.

Evidently, the insurance lobby is the largest lobby in Montana. Further, Senator Baucus seems unwilling to expend his political capital to benefit small business owners in Montana with respect to health insurance premiums. He should be applauded for some of his work on small business, however, when it comes to insurance, he needs to be much more involved.

Again, Montana is one of three states without rate review and the result is predictably abysmal. How can Montana attract or retain small business owners and entrepreneurs? Given Montana’s 6.9% income tax beginning at $15,600, a small business owner may pay nearly as much as if he/she were a resident of California. In California, 6% starts at $55,794 and 8% does not start until $77,452. Leaving Montana (say for Nevada), could eliminate a five figure annual state income tax bill and likely reduce health insurance premiums to a four figure number (e.g., for a couple running a small business).

People interested in small business creation, entrepreneurship, etc., may wish to speak up and contact their legislators as soon as possible. The situation may get even worse, potentially much worse (i.e., if they raise the Medicare eligibility age to 67, those aged 65/66 may be paying tens of thousands a year. For a couple, likely $30,000+ per year for health insurance."

Brian Pangrle