Partner Benefits Availability Expanded

Bloomberg prevails on insurers to offer coverage to small companies

The lobbying by Republican Mayor Michael R. Bloomberg that resulted in four health insurance companies selling insurance that covers the domestic partners of employees at New York City companies with between two and 50 workers was hailed by two leading gay groups.

“Today, our community has won an important victory,” said Alan Van Capelle, executive director of Empire State Pride Agenda, the statewide gay lobbying organization, in an October 6 press statement released by City Hall. “The mayor used his leadership in the corporate community to change the status quo in a healthcare marketplace that has long ignored the needs of people in domestic partner relationships. The Empire State Pride Agenda thanks him!”

In that same press statement, Matt Foreman, executive director of the National Gay and Lesbian Task Force and the former ESPA head, said, “This tremendous step will result in tens of thousands of gay New Yorkers having access to affordable healthcare. We congratulate Mayor Bloomberg and the Empire State Pride Agenda for this long sought breakthrough.”

The four companies, Group Health Inc. (GHI), Empire Blue Cross and Blue Shield, HIP Health Plans of New York, and Horizon Healthcare Insurance Company of New York, are under contract with the city to provide health insurance coverage to city employees.

For companies with 51 or more employees and for the city, all four give enrollees the option of adding a domestic partner to their coverage and the insurers have offered this option for years, but no insurer selling in the city has offered the option to small businesses. Roughly three months ago, the Bloomberg administration asked the four to add the option for smaller companies.

“No one has come to me and said will you consider this until we were approached by the mayor’s office two or three months ago,” said Steven Kessler, GHI’s senior vice president of actuarial and underwriting. “We said we would be willing to do that… We thought it was important that there be other carriers involved as well.”

The four companies must get the approval of the state insurance department to sell the option. That could take one to three months.

The demand for such an option is low. GHI covers two thirds of the city’s roughly 300,000 municipal employees and one-and-a-half percent of the company’s city enrollees select the domestic partner option.

“As I’ve researched it, I’ve found it to be very consistent,” Kessler said. Among the one-and-a-half percent, 85 percent are opposite sex-couples and 15 percent are same-sex couples.

The fact that insurers had not already offered the option to small businesses suggested that the market for it was not large.

“If there was a market opportunity here, you would think that companies would have jumped into this on their own,” said Howard S. Berliner, a professor of health policy and the director of Ph.D. Program at the Milano Graduate School of The New School. “I think probably the insurance companies in New York have gotten wealthy by narrowing their market not expanding it… As a result they insure fewer people, but they make more profit.”

There are roughly 200,000 businesses in the city that have between two and 49 employees, according to the state Department of Labor. How many currently offer their employees any sort of health coverage is a question.

“It really depends on how you define a small business,” Berliner said. “I think it’s fair to say that less than half of all small businesses provide health insurance to their workers.”

In an interview, Van Capelle said that the greater problem may be that many small employers offer no health benefits to their employees at all.

“I think there’s a big problem in New York City in that companies don’t offer any health insurance period,” he said. “I think it’s unlikely that companies that don’t offer benefits at all are going to start offering benefits because of this.”

The quality of any coverage may also vary. Some companies may require that employees pay a significant portion of the premium. Still, Berliner, who sits on the GHI board and helped get the four insurers to enter the new market, approved of the move.

“I think everything you can do to increase the number of people with health insurance is really a good thing,” he said.

Van Capelle said that some employers, such as ESPA, could now pressure their insurance providers to add the option by threatening to move to one of the four companies. Berliner thought that was unlikely to succeed.

“I think that the truth is no it won’t and I think it’s because a lot of insurance companies are afraid that what you get through partner benefits is selective bias,” he said, referring to the practice of sicker people signing up. “I think there is a general sense among insurance companies that if we provide this our costs will go up.”

Last year, Bloomberg vetoed the Equal Benefits Bill, a local law that required businesses holding contracts worth $100,000 or more with the city to offer the same benefits to the domestic partners of their employees that they offered to the spouses of their employees. When the City Council overrode his veto, the Bloomberg administration filed a to-date successful legal challenge against the law.

“The city can’t use its procurement policies to advance social issues because if it did eventually you couldn’t do business with anybody,” the mayor said in June.

The October 6 statement noted that businesses with two to 50 employees account for 74 percent of city vendors. While those businesses can now purchase health insurance that offers domestic partner coverage, there is no requirement to do so.

Bloomberg also issued an executive order on October 6 that requires businesses with city contracts worth $100,000 or more to report to the city if “they offer health care coverage to their employees and, if so, whether coverage is offered on an equal basis to the spouses and domestic partners of those employees,” according to the press statement. Van Capelle said the order was insufficient.

“It’s not the Equal Benefits Bill and nothing is as good as the Equal Benefits Bill,” he said. “The mayor should still drop his opposition to it and the city should begin implementing it. I think the executive order is an interesting idea and I will be interested in seeing what kind of effect it has, but the Pride Agenda’s position is that the Equal Benefits Bill is better.”

On October 3, Bloomberg signed the Local Civil Rights Restoration Act, a city law that added “partnership status,” which was defined as “being in a domestic partnership,” to the city’s anti-discrimination law.

While federal law generally preempts state and local law on employee benefits issues, the city has now made it possible for domestic partners to sue their employer if they believe they are not receiving the same benefits as married employees.