Senators want to reduce sticker shock if a batch of proposed insurance reforms is passed into law.

Lawmakers have spent months tweaking small business health insurance regulations in an effort to prevent sick or rural workers from paying exorbitant monthly premiums. But some are worried that the changes might cause sharp rate increases for healthier, urban workers.

To solve that problem, the New Hampshire Senate amended a bill yesterday, SB 125, to limit rate increases to no more than 20 percent next year, although inflation could drive some premiums a little higher. A similar House bill includes slightly lower caps.

Sen. Maggie Hassan, an Exeter Democrat, said any changes to insurance law would cause rate fluctuations during the first year. The caps, she said, are "whiplash protection."

Politicians and business owners have been grappling with insurance reform ever since a law known as SB 110 went into effect a year ago. The idea behind it was to increase competition among insurance providers and allow the market to drive rates down. But for many small businesses, the law had the opposite effect, causing sharp rate increases for companies with sick workers or rural offices.

During last year's campaign season, Gov. John Lynch and many candidates for the House and Senate, Hassan included, promised to repeal the law. Two weeks ago, the Senate endorsed a number of changes. Insurance companies would no longer be able to consider medical history or geography when setting rates. In return, the state would offer a reinsurance pool to help companies pay for their most expensive clients.

"We had an obligation to come here this year and fix it," Sen. Dick Green, a Rochester Republican, said about SB 110. "This isn't perfect, but there is no such thing as a perfect bill."

In addition to the caps, the bill passed yesterday limits how much rates can vary among businesses.

Hassan, Green and other supporters believe this bill is easily understandable and fair, but not everyone agrees. Some opponents believe changing the laws again will scare new companies away from the state. Others, like Sen. Bob Clegg, a Hudson Republican, think temporary caps aren't the way to go.

"We still haven't resolved the problem," he said. "We still have some businesses out there who can't afford it, and this doesn't address that."

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By MEG HECKMAN

Monitor staff