New law, learning curve sideline second consortium

The success of Southwest Area Manufacturers Association’s first association health plan consortium last year spawned talk of a second grouping.

However, health insurance providers have been reluctant to bid on association health plans since Missouri Gov. Matt Blunt signed House Bill 1827 into law last July. Under the law, associations with at least 50 member companies are eligible for the health plans, which spread risk and administrative costs across a broad pool of employees.

The legislation – sponsored by state Rep. Jay Wasson, R-Nixa – was modeled after the SAMA I consortium that assisted smaller companies marginalized by the rising cost of health insurance.

Through SAMA I – a pilot project specially permitted by Missouri’s Department of Insurance – 32 member companies comprising 1,300 employees gained access to a uniform benefits package. Businesses committed to the plan for three years, and initial savings ranged from 18 percent for the largest employer to as much as 50 percent for smaller employers, officials said.

The second incarnation of the health care consortium – dubbed SAMA II – was slated for 2007, but it’s been temporarily sidelined as state officials and health insurance providers work out kinks in the new law.

A major dilemma for insurance carriers has been providing uniform coverage to employees whose duties and on-the-job risks vary widely from company to company, said Emily Kampeter, spokeswoman for the state Department of Insurance, Financial Institutions and Professional Registration.

“What we’re finding out now … is that the industry has varying practices of rating in regards to rating people under one employer,” she said. “It’s hard to rate all those people as one, because the risks are different.”

Kampeter said the department is working with carriers to better define the statute through regulation, with an emphasis on resolving the employer-rating quandary.

The run on association health plans after HB 1827 was signed into law is a testament to the intense interest in group health care for smaller businesses, but SAMA Executive Director Rita Needham said many associations pursuing the plans didn’t fully grasp the concept.

“They didn’t understand how to do it, what it would entail as far as how to put one together, the commitments that are involved,” she said, adding that SAMA II became a casualty when carriers pulled back. “That created a lot of uncertainty from health providers, so what we expected as far as getting competitive quotes from different health carriers (for SAMA II) did not materialize. They wanted to wait until this settles down … before they start bidding on those.”

Needham said SAMA members were “somewhat caught off-guard” when the providers agreed to step back from the health plans, especially since some of them had publicly expressed interest in bidding on SAMA II.

Although on hold for now, a second health care consortium for SAMA members hasn’t been abandoned, Needham said, noting that interest hasn’t wavered.

“We fully think this will materialize,” she said. “We think (carriers will) be back at the table this year.”

Wasson said he’s aware of at least a half-dozen groups in Missouri, including the Ozarks Regional Economic Partnership and the Home Builders Association of Greater Springfield, that are considering association health plans.

“They … are moving slowly and probably should, because I don’t want it to be a deal that flames up and flames out,” he said. “I don’t want it to be a shooting star. I want it to be something that lasts.”

Meanwhile, SAMA I was renewed for 31 member companies, six of which were previously unable to provide employees with health insurance. Welhener & Saville of Springfield is one of those six companies.

“The quality of the plan and the benefits are terrific, and the price was reasonable,” said President Jim Conley. “The ability to spread the risk pool is tremendous.”

Conley, who also sits on the SAMA Board of Directors, said his company now has a full year of usage data for its nine employees and a better understanding of its health insurance expenses.

With initial confusion about the new law and its intended beneficiaries, Conley said the objective of association health plans might have been misinterpreted.

“As soon as the legislation passed … everybody and their brother who thought they had anything resembling an association thought that this was the be-all, end-all, and it’s not,” he said. “It’s a solution for folks seeking long-term health care. Unfortunately, folks thought maybe they could band together (for) short-term health care savings.”

Group plan rules

Associations eligible for group health care plans under a new Missouri law intended to extend affordable benefits to smaller companies must meet certain criteria.

• At least 50 member employers.

• Organized for purposes other than maintaining health insurance as a group.

• Active existence for at least two years.

• Regular meetings not less than annually to further purpose of members.

• Provide members with voting privileges and representation on a governing board.

• All member employers and employees must be rated and underwritten as a single employer.

• Employees under plan must be issued and guaranteed uniform health benefits.

Source: Missouri Department of Insurance, Financial Institutions and Professional Registration