Small businesses are being "purged" so that insurance companies may profit.

You might not realize it, but this is National Small Business Week. I’m betting many small business owners aren’t aware of it, either. Perhaps that’s because most small business owners are far more likely to be worrying about whether they’ll be able to offer health insurance to their employees for another year.

Or is this the year they join the ever-growing list of small businesses that have been “purged” by their insurance carrier?

For several years now, insurance companies have been “purging” small business accounts they no longer consider profitable enough or that their underwriters believe pose too much risk. I became familiar with “purging” (yes, that’s the actual word insurance executives use internally) toward the end of my career as an industry PR man.

Virtually unknown outside of a few executive suites until I disclosed it in testimony before the Senate Commerce, Science and Transportation Committee in June 2009, the practice is most prevalent at the big for-profit insurance companies — the ones that are under the gun to meet investors’ profit expectations every three months. Along with “rescinding” (cancelling) the policies of individuals who become seriously ill, purging small businesses that employ workers who get sick is a tried-and-true way of meeting Wall Street’s expectations.

All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year’s premiums so high that the employer has to cut benefits, shop for another carrier or stop offering coverage altogether, leaving all their workers—and their dependents—uninsured.

The purging of less profitable accounts through intentionally unrealistic rate increases helps explain why the number of small businesses offering coverage to their employees has been declining for several years and why the number of Americans without coverage reached a record high of nearly 51 million last year. According to the National Small Business Association, the number of small businesses that provide health insurance to their employees fell from 61 percent in 1993 to 38 percent in 2009.


Link:
http://www.iwatchnews.org/2011/05/16/4618/analysis-purging-small-business-coverage-hike-health-insurance-profits