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Domestic partner insurance: coming soon to a city near you? New York city's path to equal-benefits plans might prove a model for other parts of the country, middle America included

Advocate, The, Dec 4, 2007 by Kerry Eleveld

In 1996, San Francisco boldly passed a law that required virtually all companies doing business with the city to provide domestic partners equal access to health insurance. The landmark legislation paved the way for 13 progressive cities and counties (such as Seattle; Berkeley, Calif.; and Portland, Ore.) to subsequently adopt their own equal-benefits ordinances.

Yet even with these laws, getting access to domestic-partner insurance plans was a problem--especially for small businesses of 50 or fewer employees. While many private insurers offer DP plans to large companies, they almost universally don't offer them to small businesses. Passing a law was important because it provided the leverage to approach insurers about offering such plans to small companies.

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Surprisingly, New York--a city where small businesses make up about 97% of the market--fell short of enacting its own ordinance in 2004. But what has happened since then may prove revelatory for governments that can't muster the political will to pass equal-benefits legislation. Not that political will was lacking in New York: The city has provided domestic-partner insurance to municipal employees since 1998. Six years later the city council voted to require the same of city vendors, passing an equal-benefits law not once but twice--the second time overriding Mayor Michael Bloomberg's veto.

The mayor, who built Bloomberg LP into a multibillion-dollar business before venturing into politics, was convinced the ordinance wasn't legal. According to his lawyers, it conflicted with state and federal laws that say city contracting processes are strictly controlled by the state. Essentially, cities don't have the power to add other considerations (e.g. which companies provide DP benefits) to the bidding process because it disrupts the free market.

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Despite his reasoning, Mayor Bloomberg took a lot of heat from gay activists, who saw his veto as nothingless than antigay bigotry. When the city council overrode the veto, Bloomberg refused to implement the law, so the city council sued him. Ultimately, the New York state court of appeals sided with the mayor, ruling that the equal-benefits ordinance was in fact illegal.

So the mayor began asking a different question: In the absence of an equal-benefits law, how do you convince private insurers to make domestic-partner plans available to small businesses? His solution: Go directly to the insurance companies and, well, ask. Anthony Crowell, counselor to the mayor, recalls Bloomberg saying, "If you get a couple insurers to do it, everyone will do it, because a natural market will be created."

The mayor's team approached two of the eight insurers that provided health insurance in New York City at the time, Group Health Inc. and Health Insurance Plan of New York. Marjorie Cadogan, executive deputy commissioner of the city's Office of Citywide Health Insurance Access, remembers thinking it would be a difficult road, but the best incentive for insurers would be peer pressure. "If we could get the ear and attention of some of the bigger insurance players in New York City, market pressure and competition" would get the others on board, she says. "Insurers really work across the market--if their competitors have a product or an offering that they don't, that's a bit of market share that they're losing."

The biggest hurdle was to convince insurers that providing DP insurance for small businesses wouldn't be costlier than providing it for firms with more than 50 employees. While insurance rates for big companies are based on actual usage, small groups get a flat rate--which is more expensive for insurers and could be especially problematic if domestic partners tended to seek more medical care than spouses do.

"At first, it appeared that there could be several incorrect assumptions about the risk pool involved and costs of coverage," says Bill Heinzen, deputy counselor to the mayor, who with Cadogan took part in the initial discussions. Those assumptions included concerns that domestic partners might cost more to cover due to applicants with HIV or AIDS; possible increased use of in vitro fertilization; and even some non-economic religious concerns. "We really had to encourage the insurers to sit down with their actuaries and do some homework," adds Cadogan.

One insurer, Group Health, had the benefit of analyzing data it had collected from having already provided DP coverage to New York City employees. "We did experiential studies on that population and found, in fact, their experience was no different than the non-domestic partner experience," says Steve Kessler, senior vice president for actuarial and underwriting at Group Health. "So that's why we extended coverage."

By October 2005, when Mayor Bloomberg signed an executive order to educate businesses about the value and availability of DP insurance, four insurers had agreed to voluntarily provide domestic-partner plans: Group Health, Heakh Insurance Plan of New York, Empire Blue Cross/Blue Shield, and Horizon (since merged with another insurer). Over the next 20 months the city engaged in what Cadogan calls a "charm offensive," and by summer 2007 the remaining insurers had fallen in line: Oxford, Aetna, Atlantis, Cigna, and HealthNet.

Domestic partner insurance: coming soon to a city near you? New York city's path to equal-benefits plans might prove a model for other parts of the country, middle America included

Advocate, The, Dec 4, 2007 by Kerry Eleveld

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