HS HCS HB 1412 -- HEALTH PLANS FOR SMALL EMPLOYERS (Harlan)

This substitute allows small employers to obtain medical
coverage through the Missouri Consolidated Health Care Plan, the
health insurance plan offering coverage to state employees.  Any
employer with an average of 50 or fewer employees during the
preceding calendar year that is actively engaged in business,
has its principal place of business in this state, and was not
formed primarily for purposes of buying health insurance
qualifies as a small employer.  Licensed professionals who are
Missouri residents and actively engaged in that profession
similarly qualify.  The employer is also required to employ at
least one person on the first day of the plan year, which is a
12 month period designated by the plan's board and used to
calculate rates.  The plan's board is authorized to administer
the coverage provided to small employers.  In addition, the
substitute authorizes any insurance agent licensed to sell
accident and health insurance to sell the plan's coverage to
small employers and political subdivisions.

The substitute also:

(1)  Allows employer associations to be paid commissions for
placing small employers under the plan's coverage;

(2)  Requires the board to hold an open enrollment period for
small employers.  During the enrollment period, a small employer
must submit demographic information including the age, sex, and
number of employees to be covered.  Small businesses may apply
for coverage after the enrollment period, but are required to
pay an additional 10% premium and provide evidence of the good
health status of the employees to be enrolled;

(3)  Requires the plan's board to establish 3 pools consisting
of employees of the state, local governmental entities, and
small businesses.  The board must provide the same health care
coverage for each pool and any bid to provide health care
coverage for the plan must include a bid for each pool.  The
board and those submitting bids are allowed to charge different
rates and premiums for each pool;

(4)  Requires the board to schedule an election of the small
employers when the number of covered persons in the small
employers' pool exceeds the number of covered persons in the
other pools on August 18, 1998.  During the election, small
employers may vote on whether the group should discontinue
participation in the plan and form a separate plan.  A separate
plan may also be formed upon the petition of a majority of the
participating employers;

(5)  Allows coverage for small employers to begin on or after
January 1, 2000;

(6)  Prohibits the state from using its funds to cover any
losses resulting from the addition of small employers to the
plan;

(7)  Prohibits the plan from covering elective abortions; and

(8)  Requires the plan's board to conduct a study of the
actuarial soundness of allowing small businesses to participate
in the plan.

The substitute has an effective date of January 1, 1999.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of
$140,350 in FY 1999, $0 to $253,819 in FY 2000, and $0 to
$629,665 in FY 2001.

HCS HB 1412 -- HEALTH PLANS FOR SMALL EMPLOYERS

SPONSOR:  Harlan

COMMITTEE ACTION:  Voted "do pass" by the Committee on Critical
Issues by a vote of 18 to 4.

This substitute allows small employers to obtain medical
coverage through the Missouri Consolidated Health Care Plan, the
health insurance plan offering coverage to state employees.  Any
employer with an average of 50 or fewer employees during the
preceding calendar year that is actively engaged in business,
has its principal place of business in this state, and was not
formed primarily for purposes of buying health insurance
qualifies as a small employer.  The employer is also required to
employ at least one person on the first day of the plan year,
which is a 12 month period designated by the plan's board and
used to calculate rates.  The plan's board is authorized to
administer the coverage provided to small employers.  In
addition, the substitute authorizes any insurance agent licensed
to sell accident and health insurance to sell the plan's
coverage to small employers.

The substitute also:

(1)  Allows employer associations to be paid commissions for
placing small employers under the plan's coverage;

(2)  Requires the board to hold an open enrollment period for
small employers.  During the enrollment period, a small employer
must submit demographic information including the age, sex, and
number of employees to be covered.  Small businesses may apply
for coverage after the enrollment period, but are required to
pay an additional 10% premium;

(3)  Requires the plan's board to establish 3 pools consisting
of employees of the state, local governmental entities, and
small businesses.  The board must provide the same health care
coverage for each pool and any bid to provide health care
coverage for the plan must include a bid for each pool.  The
board and those submitting bids are allowed to charge different
rates and premiums for each pool;

(4)  Requires the board to schedule an election of the small
employers when the number of covered persons in the small
employers' pool exceeds the number of covered persons in the
other pools on August 28, 1998.  During the election, small
employers may vote on whether the group should discontinue
participation in the plan and form a separate plan; and

(5)  Allows coverage for small employers to begin on or after
January 1, 2000.

The substitute has an effective date of January 1, 1999.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of
$140,350 in FY 1999, $0 to $253,819 in FY 2000, and $0 to
$629,665 in FY 2001.

PROPONENTS:  Supporters say that this bill addresses an
important issue for small businesses and their employees.  Small
employers have consistently rated providing health care to their
employees as a significant problem.  Generally, the small
employers are unable to take advantage of cost savings that can
be obtained through large pools.  In addition, they often find
it difficult to provide affordable coverage if they employ
someone with a high medical risk.  These employees are
frequently forced to find employment with the government or a
large business so that they may obtain affordable health care
coverage.  Small employers report having problems retaining
employees because of the inability to provide health coverage at
a reasonable cost.  Allowing small employers to participate in
the Missouri Consolidated Health Care Plan will offer their
employees reasonable rates and the ability to choose  from
several health plans.

Testifying for the bill were Representative Harlan; D & H
Prescription Drug Co.; Jackson Brothers; Heartland Food Service
Management Companies; National Federation of Independent
Businesses; Martin Ratermann; Marinell Walz; Boone County Group
Homes & Family Support; Kevin Edmonds; Cindi Keele; American
Association of Retired Persons; Missouri Association of
Realtors; National Association of Social Workers; Missouri
Association of Osteopathic Physicians & Surgeons; Missouri State
Chiropractors Association; Missouri State Medical Association;
Mid-Missourians for Universal/Single Payer Health Care; and
Missouri Hospital Association.

OPPONENTS:  Those who oppose the bill say that this proposal
will cause independent insurance agents to lose business.  The
bill's definition of employer is too vague; it would allow
anyone to participate in the plan.  The proposal could
jeopardize the coverage provided to state employees if only
small businesses with "high risk" employees choose to
participate.  Other options for small employers have not been
explored and the bill's proposal has not been studied adequately.

Testifying against the bill were Representative Secrest;
Missouri Association of Insurance Agents; Alliance Blue Cross
Blue Shield; Blue Cross Blue Shield of Kansas City; Missouri
Chamber of Commerce; Ronald Kappelman; Missouri Merchants and
Manufacturers Association; and Missouri Insurance Coalition.

Katharine Hickel, Legislative Analyst

HB 1412 -- Health Plans for Small Employers

Co-Sponsors:  Harlan, Foley

This bill allows small employers to obtain medical coverage
through the Missouri Consolidated Health Care Plan, the health
insurance plan offering coverage to state employees.  Any
employer with an average of 50 or fewer employees during the
preceding calendar year qualifies as a small employer.  The
employer is also required to employ at least one person on the
first day of the plan year, which is a 12 month period
designated by the plan's board and used to calculate rates.  The
plan's board is authorized to administer the coverage provided
to small employers, but is required to maintain in a separate
account all premiums and other income it receives from providing
that coverage.  In addition, the bill authorizes any insurance
agent licensed to sell accident and health insurance to sell the
plan's coverage to small employers.  The bill has an effective
date of January 1, 2000.