• Business groups lose insurance revenue to exchange
    By
     | September 27,2013
     

    MONPTELIER — Business associations in Vermont have long played a key role in the health insurance industry, pooling members to secure more favorable rates from private carriers.

    But the forced migration of the small-business market onto the new health insurance exchange will largely eliminate those groups’ role in the sector. And the transition could cut into a revenue stream that has helped fund lobbying and advocacy on behalf of business interests across the state.

    Whether through commissions from sales of insurance products, or through membership dues from businesses seeking access to reduced rates, local chambers of commerce and other business groups derive a portion of their annual operating budgets from the insurance business.

    “It’s quite possible that some member who joined for health insurance might revisit their membership, though we’re certainly doing everything we can to encourage them to stay with us,” said Tasha Wallis, executive director of the Vermont Retailers Association.

    Jim Harrison, head of the Vermont Grocers Association, said it’s too early to know how substantial the financial hit will be.

    “There absolutely will be an impact on any association that runs a group health plan,” Harrison said Thursday. “What none of us know is what that impact will be until it happens. And we’re obviously working to make sure we’re offering the best value and best service to members.”

    The decision by lawmakers last year to require businesses with fewer than 50 employees to purchase their health insurance from the new online exchange stemmed in part from a desire to shave the administrative fees baked into the association system.

    Revenue generated by those fees, however, has helped fund pro-business advocacy and other member-oriented services run by trade groups. To the extent that some businesses joined their local chambers of commerce solely to gain access to reduced insurance rates, said one chamber official, the organizations could suffer a decline in memberships, as well as budgets supported by dues.

    “Any member who’s only interested in insurance, and who no longer has an interest in insurance, is no longer going to be interested (in being a chamber member),” said George Malek, executive director of the Central Vermont Chamber of Commerce.

    Chambers of commerce around the state collectively run the largest association plan in the state. The Vermont Association of Chamber Executives is used by 4,500 businesses, and covers about 20,000 individuals. The plan will become defunct next year, when small businesses and their employees will be required to purchase their insurance from one of the 18 products sold on the new exchange.

    At the Lake Champlain Regional Chamber of Commerce, annual dues start at $260 for a one- to two-person business. Kathy Davis, vice-president of public affairs for the LCRCC, said the organization has been sweetening its other benefits to avoid the dip in membership that might otherwise occur when one of its most popular perks expires.

    “That said, do we think we might have members that might not renew once that piece goes away? Definitely,” Davis said. “It’s something we’ve been planning for and it’s something we’ve been really trying to reach out to members and say, ‘let’s talk about all the other things we can do for you.’”

    @Tagline:peter.hirschfeld@timesargus.com

    peter.hirschfeld@rutlandherald.com

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