Empire's insurance cuts a state concern
The superintendent of New York State's newly established financial services department said Tuesday he is in "active discussions" with Empire BlueCross BlueShield over a decision by the state's largest insurer to reduce the number of health plans it offers to small businesses by more than half, effective April 1.
Benjamin Lawsky, who was confirmed in May as superintendent of the new department, which was established earlier this year to oversee banking and insurance, told a breakfast meeting sponsored by the Long Island Association that Empire's decision created "a very bad situation" for its policyholders in the state.
"I don't think I have the legal power to tell them they can't leave, but we worry about it every day," Lawsky said at the breakfast at the Crest Hollow Country Club in Woodbury.
The Empire issue arose during a question-and-answer period after Lawsky's speech, in which he said he would search for "a third way" to regulate insurance and banking companies in the state, avoiding acting too harshly and thus squashing business growth or too leniently and thus not protecting consumers enough.
Empire said it plans to eliminate seven of its 13 small-group plans, which cover companies with two to 50 eligible employees. About 20,000 small businesses participate in the seven plans Empire will drop. Some 10,000 participate in the six plans the company will retain.
Mark Wagar, Empire's chief executive, said through a spokeswoman that the company has "engaged with the department of financial services for several months now on the facts and issues" that confront both sides "and are working on how to resolve the situation and stabilize the market."
Empire officials have said the company is losing money as the number of small-group companies offering insurance to employees continues to drop because of the slow economy and rising medical costs.
Gary Slavin, a Garden City financial planner, said he will have to move five client groups, representing a total of 10 to 25 employees, to another insurer. But without Empire the choices will be few, he said. With fewer choices, Slavin said, rates will eventually "skyrocket."
Ken Greenberg, chief executive of Hauppauge-based ad agency Austin & Williams, said the firm switched to Empire in August "and now it looks like we'll have to switch again."
"Of course that's going to cost more," Greenberg said.
Lawsky suggested he might be able to persuade Empire not to drop all of its plans at once but rather to phase some out slowly to allow businesses to find new coverage.
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