LETTERS: SMALL GROUPS IN STATE PLAN: BAD IDEA

To the editor:

Missouri legislative proposals to expand access to health insurance by letting small businesses buy into the state's Missouri Consolidated Health Care Plan are as misdirected as they are well-intentioned.

The proposals, embodied in the House Committee Substitute for House Bill 1412 and a Senate companion bill, make a promise that can't be kept without direct or indirect subsidies from state employees and the state -- subsidies that the taxpayers will pay for.

The basic premise of HB 1412 -- that collecting small business into an MCHCP pool will give them the same cost savings that the state and state employees enjoy -- is flawed and actuarially unsound.

There are key differences between the state employee group and the proposed business pool that HB 1412 overlooks or ignore:

-- The state group is broad-based, well-defined group of people who are required to buy their health insurance through MCHCP.

-- Small businesses, on the other hand, could opt into and out of MCHCP from the private insurance market depending on where they can get the best deal.

Obviously, businesses that can get the best rates in the private insurance market will stay with the private market. Obviously too, the businesses that move to MCHCP will be those whose higher utilization of care has meant they have higher rates.

There's been experience with opening up MCHCP beyond its obligation to state employees. It was opened to local government bodies on a voluntary basis. In 1997, Alliance Blue Cross Blue Shield's benefits expense for the MCHCP local-government participants was 33 percent higher than for state employees. The same kind of adverse selection would plague an MCHCP small-group pool.

Over time, small groups in the MCHCP show experience improves would find they can do better in the private insurance market and, in essence, cherry pick themselves out of MCHCP. Costs would inevitably climb, and renewal premiums would climb with them.

As the MCHCP inadvertently turns itself into a high-risk pool, the state would face four hard choices:

-- Kill the MCHCP small-group pool, leaving the small businesses in the program scrambling to find health insurance.

-- Subsidize the pool by raising state employees' premiums.

-- Subsidize the costs with taxpayer dollars.

-- Subsidize the costs with a new tax on private health insurance and, therefore, private health insurance buyers.

Blue Cross and Blue Shield of Missouri has been expanding access to health care through health insurance for Missouri and Missourians for more than 60 years. We support efforts at every level that will truly and equitably make health care available to more people. HB 1412 doesn't meet the test.

There are government programs already in place designed to expand access to health insurance for small business. Federal legislation forbids insurers from turning away small groups, and the state's own small-group reform law requires some subsidy of high-risk small groups with the premiums of lower risk groups.

Let's remember that the No. 1 driver of high premiums is the cost of care itself. Let's give the state's small-group reform and the federal Health Insurance Portability and Accountability Act a chance to work before we try something so unrefined and untested as HB 1412.

JOHN J. O'ROURKE, President

Blue Cross and Blue Shield of Missouri

St. Louis