Empire Blue Cross Blue Shield plans to drop its small groups, coverage to end April 1

Empire Blue Cross Blue Shield is dropping its small group health insurance plans in New York effective next April 1, and although the company’s decision will affect many thousands of people and businesses, brokers are divided over the severity of the potential impact.

A statewide insurance brokers’ trade group describes the move as “nothing short of catastrophic,” but one local broker said there’s little, if anything, to fear.

Karl Washwick, owner of Washwick Insurance Agency in Riverhead, said Empire’s decision, which does not need state approval, would eliminate all but four of its small group plans. Two of those four plans are so costly none of his customers are enrolled in them, he said.

The two plans his agency handles are Healthy New York, a state-subsidized plan for starter businesses and lower-income residents, and the Empire HMO. He said the bulk of his Empire customers are enrolled in the company’s Prism and HSA programs, which are to be eliminated.

He disagrees with the New York State Association of Health Underwriters, which offered its “catastrophic’ assessment in a letter to the state Department of Financial Services.

“There are viable options,” he said. “Nobody should panic.”

Mr. Washwick said he received word of Empire’s plans on Monday and suggested on Tuesday that his affected customers immediately start considering alternative insurance carriers.

“The disruption of Empire leaving isn’t a catastrophe yet,” he said. Empire customers can turn to Oxford, Aetna, Emblem and HIP, which he said offer similar coverage at similar cost.

“The premiums are all about the same,” he said. “They won’t be paying any more than if Empire stayed in the market.”

His one concern is the potential for any of those companies to follow Empire’s lead and also drop small group coverage.

“I don’t have a crystal ball, but if I did, what I’d see is pretty dark,” he said. “You need competition and people need choices, but the long-term trend is toward consolidation.”

The health underwriters group shares that fear.

“Multiple small employers with literally tens of thousands of employees are going to be left without coverage, as there will be only two to three other carriers left in which brokers may try to place coverage,” the underwriters group said in its November 2 letter. “If the other carriers follow suit, the availability of coverage will dry up entirely.”

Empire is reportedly cutting back in reaction to the state’s denial of multiple rate hike requests.