Md. small-business workers increase purchase of policies

Rise in coverage occurs despite higher premiums

Health insurance

June 04, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Although health insurance premiums for small businesses increased last year, nearly 10 percent more people were covered under those policies, according to a survey report released yesterday.

"At a time when people are losing health insurance, it appears reforms seem to be working -- at least in the small-group market," said John M. Colmers, executive director of the state's Health Care Access and Cost Commission, which regulates the insurance market for businesses with fewer than 50 employees and conducted the survey.

Before state reforms began in 1993, the commission's annual surveys found the cost of insurance was prohibitive for workers in small businesses.

In 1998, there were 489,473 people with insurance coverage in the small business sector -- meaning employees and their families -- compared with 445,509 in 1997, the new report said.

The increase is a reflection of insurance becoming more affordable for small businesses, as well as the growth in the number of small businesses, Colmers said.

In 1998, there were 54,016 employers involved in the small group insurance market, compared with 50,260 in 1997, a 7.5 percent increase, the report said. A total of 113,000 businesses are classified as small employers in Maryland.

On the flip side, the report also revealed that the average premium increased more rapidly than wages for the first year since the commission began monitoring the market.

Yet, premiums are "considerably below the cap," Colmers said. The average premium must be lower than 12 percent of Maryland's average wage.

While the average wage grew by 3.2 percent last year to $32,780, the average premium grew by 6.3 percent to $3,310. For 1997, the average wage grew by 4.9 percent to $31,764, while the average premium grew 2.7 percent to $3,115.

"Health insurance premiums have risen in all sectors," said Dennis Carroll, Maryland's deputy insurance commissioner. "The increases have been substantial in some instances. We attribute the rise to medical inflation, as well as the costs and utilization of prescription drugs."

Premiums also increased this year because insurance companies in the highly competitive small-group market had previously held back raising premiums to gain an edge in pricing, Colmers said.

"The increase is less than we anticipated," Colmers said, adding that he expected premiums to rise 7 percent or 8 percent. "But we have to keep our eyes on it."

Pub Date: 6/04/99

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