Rival bills address insurance program

Two Flathead legislators have competing bills aimed at changing the state's popular small-business insurance program.

And they both say their respective approaches will stretch tobacco tax dollars further within the program.

Rep. Jon Sonju, R-Kalispell, is sponsoring House Bill 766, saying it will promote healthy competition within the Insure Montana program, and he says a bill sponsored by Sen. Dan Weinberg, D-Whitefish, on behalf of State Auditor John Morrison will discourage competition.

Weinberg and Morrison say that's not the case. They say Senate Bill 140 will expand the Insure Montana program and do so in a fashion that will bring cost-saving efficiencies.

Morrison said SB 140 will establish conditions for a "community rating" in which each participant statewide pays the same rates. That will lead to considerable cost-saving efficiencies, he said.

The trend toward community rating is exactly the problem with Weinberg's bill, according to Sonju and Daren Engellant, owner of Glacier Insurance Strategies, a firm that represents the Montana Retailers Association and the Flathead Business and Industry Association.

Glacier Insurance Strategies submitted an application to participate in the Insure Montana program as an association provider, but the application was denied by Morrison's office after a 14-month wait.

Engellant said the associations he represents would have used Western Mutual Insurance Co., based in Salt Lake City, while seven associations accepted by the program were backed by Blue Cross-Blue Shield.

Sonju said the effect of Weinberg's bill would be to "build a box around Blue Cross-Blue Shield."

But Morrison says that's not the case.

Through a "request for proposal" bidding process, insurance providers can bid on the program's purchasing pool. The program's first bidding process was conducted in 2005 and attracted only one qualifying bid - Blue Cross Blue Shield.

"Some of these companies were nervous to bid because they didn't know how it would work out" because it was a new program, Morrison said. "So there is a competitive process."

There will be another round of bidding this summer, Morrison said, with state law providing for up to three insurance providers to qualify.

But Engellant counters that he is focused on the current situation and cannot speculate whether three insurance providers will qualify. So far, he said, there is no competition in setting insurance rates within the program.

Blue Cross Blue Shield "was free to rate the group and price the products without competition," Engellant said.

Had his application been accepted, Engellant speculates, he could have competed for roughly one-third of the 600 businesses that are participating in the program using the Western Mutual Insurance Co.

Blue Cross-Blue Shield would have been forced to "sharpen their pencils" to compete on rates.

And that, he said, gets in the way of "community rating," which is Morrison's stated intent for the Insure Montana program.

"The program is not stretching tax dollars as far as they can because there is no competition," Engellant said.

Morrison explains it differently. Under the law passed in 2005, the program allowed 30 percent of the purchasing pool funding to "migrate out of the program" to a "qualified association plan."

Of the 600 businesses enrolled in

the purchasing pool, he said, only one business "elected to go through that exit door for a qualified association plan."

Morrison said the Insure Montana Board of Directors has determined that the 30 percent funding dedication "has prevented us from making our dollars go further" and it presents the risk of businesses with healthy employees choosing association plans at lower rates - a cherry-picking practice that is banned by federal law.

Morrison contends that under community rating, "Everyone in the program would pay the same amount. There would be no rating involved, based on who is in your group. And it would save on the expense involved with rating."

But Engellant rejects the argument that there is no interest in participating in Insure Montana through competing association plans.

"They're trying to make the argument that groups simply aren't interested in association plans," he said. "Nothing could be further from the truth."

Businesses did not choose association plans because they "simply didn't know that was an option. They have to apply to the state to qualify for the subsidy … then they apply for the insurance."

He said the Insure Montana program basically recommends the Blue Cross-Blue Shield plan to participating businesses.

Sonju said his bill was prompted largely because of the "ridiculous" 14-month delay in denying Engellant's application. One provision in his bill sets a 30-day deadline for a response from the Auditors Office.

The competing bills differ on another point: Weinberg's would make sole proprietors eligible for the program while Sonju's makes it available to businesses with at least two people. Both bills make the program available to businesses with no more than 15 employees, an increase from the current ceiling of nine employees.

Weinberg's bill also would boost funding for the $10 million program by $1 million, with the additional money targeted at small businesses that currently have no insurance.

"What we're trying to do is insure as many small business folks as possible," Weinberg said. "This is a responsible way to insure as many people as possible."

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com