We evaluate health insurance reclassification risk in the Small Group Market before ACA community rating regulations. We use detailed claims and premiums data from a large insurance company, controlling non parametrically for selection. We find a pass-through of 11% from changes in health risk to changes in premiums, with a stronger equilibrium relationship between the two. The pricing patterns are consistent with the insurer offering “guaranteed renewability” contracts with one-sided pricing commitment. The observed pricing policy adds 55% of the consumer welfare gain from community rating relative to experience rating, with welfare gains limited because of switching across insurance companies.