Empire Blue Cross Cuts Small Biz Coverage

Small businesses in New York will soon have fewer options for insuring their employees. Empire Blue Cross Blue Shield, one of the state’s largest insurance carriers, is discontinuing many of its most popular plans for firms with 2-50 employees.

In a written statement, Empire said it’s “sensitive to the economic challenges facing small businesses,” but the company has “experienced year-over-year financial losses in our small group business that cannot be sustained.”

Empire cited growing charges by healthcare providers, declining numbers of purchasers leading to those remaining behind paying higher costs, shrinking state subsidies and increasing “adverse selection” — the tendency of sicker people to seek out coverage in higher numbers than healthy people — as the reasons behind its decision to drop some coverage for small businesses.

"If I'm a 500-person company, chances are the reason I'm buying insurance is because I'm competing for skilled people in a labor market, and these individuals expect to have this benefit," said Peter Newell, director of United Hospital Fund's Health Insurance Project. "But if you're a company with two or three, you may be buying insurance because you yourself are in ill health, or an employee who's been with you for 25 years is in ill health — it's just a different way of buying coverage."

Still, Empire's decision came as a shock to Maryanne Connelly, who helps run a small landscape design firm. She said her premiums have been going up, but they were better at Empire than elsewhere.

“You're going to have fewer and fewer choices,” Connelly said. “The doctors are getting really wary about the insurance at all. How can this be considered competitive? I just don't understand how any of this works.”

Connelly's 14-person firm pays about $15,000 dollars a month for insurance. Employees can get full coverage from the company or choose more expensive policies and pay the difference out of pocket — which can be an additional $500 a month for individual coverage or $1,400 a month for a family.

Empire says it will continue to offer coverage for small businesses, but the company will only be offering several much less popular insurance products.

In all, about 250,000 people are covered by the small group policies Empire is dropping, and about a 100,000 are currently in the higher-cost programs it's continuing.

The only remaining carriers for small businesses are Oxford Health Plans, EmblemHealth, Atlantis and Aetna.

Sher Sperano, from Benefits Advisory Service, says it’s already been difficult to find affordable coverage for small companies, and now it will get a lot tougher.

“They’ll all have coverage, but it won’t be like what it was,” Sperano said. “They might get something comparable, but it’s going to be a lot more expensive, or it’ll be different, entirely.”