The Mandate: Under current law, municipalities with fewer than 50 employees must have a community-rated health plan.  By extension, a multiple employer trust of several municipalities attempting to jointly purchase health insurance must also be community-rated if any of its constituent employers has less than 50 employees.

The Cost: Unlike an experience-rated plan where premiums are based upon specific claims experience, community-rated plans’ premiums are determined by the collective claims experience of all insureds in a particular community pool, without regard to age, sex, health status or occupation.  It has been reported that in the first year of being subject to community-rating, almost 30% of the insured experienced premium increases ranging from 20% to 60%.

The Solution: Amend the Insurance Law so that smaller municipalities may join multiple employer trusts that are experience-rated, thereby allowing them to share in the health insurance costs savings associated with these trusts.