Cooperative Efforts

Business groups in several dozen communities have cooperated to establish coalitions to help inform employers about health care delivery and financing and, in some cases, provide utilization review, data analysis, and other services. In a few locations, public or private organizations have been created especially to assist employers, especially small employers, with the administrative side of insurance purchasing (Helms, 1992; Sailors, 1992). A frequently cited—and probably the best developed—example is the Council of Smaller Enterprises (COSE) established by Cleveland's Chamber of Commerce. Using the TPA subsidiary of its primary insurer, COSE collects premiums from member firms, makes lump sum payments to health plans on a monthly basis, handles changes in enrollment and questions from enrollees, analyzes utilization data, negotiates with insurers, and takes on the responsibility for marketing its services and products to small businesses (Alpha Center, undated; National Health Policy Forum, 1992). COSE's participating insurers (with the exception of three HMOs) medically underwrite group applicants and reject about 20 percent of business applications on that basis.2 Within groups, individual premiums are adjusted for age but not health status. Chapter 5 discusses this general purchasing concept further.

A fundamentally different and apparently unique kind of employer cooperative action is found in Rochester, New York, where the largest employers in the community have maintained a 50-year commitment to community rating that has allowed small businesses and the self-employed to receive the same Blue Cross and Blue Shield and HMO premiums as such local giants as Eastman Kodak and Xerox (Taylor, 1987; Freudenheim, 1992b; Taylor et al., 1992). In addition, the large employers have supported communitywide health planning since the early 1960s, HMO development since the early 1970s, and innovations in provider payment. Many credit this support as a major reason that Rochester has a low percentage of uninsured individuals, a lower-than-average supply of hospital beds, a higher-than-average hospital occupancy ratio, and relatively low insurance premiums and per capita health care costs.

2  

During its early years of operation in the 1970s, when there was no medical underwriting, COSE attracted older and sicker groups disproportionately. This essentially nullified the discount that had been negotiated with the local Blue Cross and Blue Shield plan. This led the organization to allow medical underwriting. The local Kaiser plan does not medically underwrite, and it expected to suffer from adverse selection. In analyzing its business, however, Kaiser found that it was getting less-risky small groups through COSE than it was securing through its own efforts—perhaps because the other plans were using such strict underwriting that many of the rejected applicants who turned to Kaiser were relatively low risk (National Health Policy Forum, 1992).



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