RALEIGH - In 2003, New Hampshire passed a law intended to make health insurance more available to small businesses. What happened stands as a case study in the law of unintended consequences. Congress needs to pay attention.

The New Hampshire law did away with state "community rating" rules that had required insurers to treat everybody the same, regardless of health status or age. The idea behind the change was that it would encourage more insurance companies to offer policies in the state, thereby making insurance for small businesses more accessible and affordable.

The new law allowed insurers to use health status in calculating group premiums, and increased the degree to which age and other characteristics could be used as a factor.

The unintended consequences were immediate and stunning.

Rates for small businesses were sent "skyrocketing across New Hampshire," as the state's governor, John Lynch, put it. "Small businesses," he said, "could not grow or hire new workers, and some considered ending their health insurance plans altogether."

The 2003 law caused a popular uproar in New Hampshire that politicians could not ignore. When the legislature reconvened in 2005, it changed the law, reinstituting prohibitions on using health status, age and other factors in setting rates..

Now the U.S. Senate is about to vote on legislation intended to do for small businesses affiliated with national trade associations what the New Hampshire law intended to do for small businesses there.

Senate bill S.1955, the "Health Insurance Marketplace Modernization and Affordability Act," would pre-empt critical consumer protections in rate setting and benefits alike. This could leave workers with unaffordable yet stripped-down coverage that does not include essential services such as cancer screening, mammograms, mental health services, diabetic supplies, maternity and well-baby care.

A number of state insurance commissioners, including North Carolina's Jim Long, have sounded warnings. Other state insurance commissioners have stated that S.1955 could cause rates to increase two- or threefold and that many small employers could be priced out of the market.

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A broad risk pool is what makes insurance affordable for the most people. Allowing insurers to segment the market so that only businesses with the youngest, healthiest workers get the good rates inevitably results in those with older or less healthy workers being left out in the cold.

While the impact in North Carolina would not be as great as in New Hampshire, North Carolina should be free to use a rating system that fits the insurance market and employment situation in our own state.

Making health insurance more accessible and affordable for small businesses affiliated with national associations is a laudable goal, but the Senate should heed the lesson of New Hampshire and reject S.1955 in its current form.

(Bob Jackson is state director of AARP North Carolina.)