I was recently told by a very reputable source that this is, in fact, happening.  They will no longer provide coverage to any group under 51 employees as of April 1, 2012.  While the announcement has apparently been made quietly, the public announcement undoubtedly will cause quite a stir.

This means that literally dozens of our clients will have to change coverage to a new carrier over the next 5 months.  Be assured that the team is already working on this.  If you haven’t heard from your account rep, you will.

This change is, unfortunately, consistent with approaches being taken in other states, and it is, IMHO, all related to Health Care Reform.  Carriers are struggling to find ways to stay profitable in the face of Medical Loss Ratios, the Comparative effectiveness fees (starting 2013) and the transitional reinsurance program that begins in 2014.  All three will raise costs to the insurers, and then to you, obviously. 

 Another example – in North Carolina, Blue Cross Blue Shield is actively targeting brokers business – sending a letter out to every broker client telling them why they should pay the same premiums, but go direct to Blue Cross Blue Shield!  Brokers are being forced to a fee-based approach as commissions are halved, and then cut again, in order to provide the service you have come to expect.

Additionally, larger carriers are positioning themselves to be part of the Exchanges in 2014, and some see the exchanges replacing small group health insurance entirely.

The fun will undoubtedly not only continue, but get crazier.

Stay Tuned… don’t panic… we are rearranging the chairs on the Titanic as you read this.