Empire to delay health policy cutbacks

After negotiations with a state regulatory agency, Empire BlueCross BlueShield said Wednesday it will gradually phase out some health insurance policies for small businesses in New York, rather than terminating them on April 1.

"While we have both the statutory and contractual right to discontinue on a fixed date," Empire said in a statement, "we believe it will be less disruptive to affected members if we discontinue these products on renewal."

Empire's reduction of coverage has been a growing worry for small businesses on Long Island.

Empire had previously announced it would cut seven of its 13 small group plans, which cover companies with two to 50 eligible employees, affecting about 20,000 small businesses. The company made several concessions after discussions with the state Department of Financial Services, said the agency's superintendent, Benjamin M. Lawsky.

"We wanted to ensure that they [Empire] didn't pull out so many products that it became a destabilizing force," Lawsky said.

Allowing the plans to expire, instead of terminating them all at once, is critical in minimizing upheaval for the market and customers, Lawsky said, especially for clients with high-deductible plans. Customers who had been building credit toward their deductibles would have to start over in midstream.

The company also will reduce the number of plans it will withdraw from the New York market. Empire said it is adding two plans. Lawsky said the company agreed to continue three of the seven plans initially on the chopping block.

In addition, the agency approved lower rate increases than Empire had requested for its insurance plans, he said. In one instance, the company asked to raise the rates for an HMO plan by 19.5 percent but received approval for an 8.9 percent increase.

Lawsky said it was important "to limit the increases there as much as we could, while allowing the company to stay healthy."

With Jamie Herzlich