Empire to cut 7 small-group health plans

Empire BlueCross BlueShield plans to reduce the number of health insurance plans it offers small businesses by more than half, effective April 1, and is seeking New York State approval for higher rates, the company said Friday.

The move will be "catastrophic" for small businesses, an insurance brokerage group told New York officials.

The announcement comes just days after the state Department of Financial Services, which approves rates for health insurance in New York, announced that five insurers, including Empire, agreed to make their filings for rate increases public.

Another health insurer, UnitedHealth Group, had earlier agreed to more transparency. Some other insurers have filed objections to the state law requiring the public disclosure.

Empire chief executive Mark Wagar said in an interview the rate-disclosure requirement, which he called "positive," had no bearing on the company's decision.

The company plans to eliminate seven of its 13 small-group plans, which cover companies with two to 50 eligible employees, Wagar said. About 20,000 small businesses participate in the seven plans the insurer will drop; 10,000 participate in the six plans the company will retain.

Wagar said the insurer has been losing money as the number of small-group companies offering insurance to employees continues to drop because of the economy and rising medical costs.

"We very quietly have been losing money in the small-group business for four years," said Wagar, who insisted Empire wasn't abandoning that market.

In a letter sent to the Department of Financial Services this week, the New York State Association of Health Underwriters said that Empire's small-group contraction will be "nothing short of catastrophic to small employers in the state . . . Multiple small employers with literally tens of thousands of employees are going to be left without coverage . . ."

The group said state restrictions on rate increases were to blame for Empire's actions.

Craig Hasday, the group's legislative chair, said he expected the resulting fewer choices could lead to higher prices for consumers and small businesses.

Empire, a unit of publicly traded WellPoint, is New York's largest health insurer.