01:00 AM EST on Thursday, January 22, 2004

IN RESPONSE to the editorial "Questions on Blue Cross" (Nov. 24), here are answers to some of the questions.

First of all, the health-care crisis in Rhode Island is not the fault of Blue Cross & Blue Shield. That there are only two carriers offering health insurance in the state (the other one being United Healthcare) has nothing to do with the size of Blue Cross or the size of its reserves. When you consider the cost of health care today, $290 million isn't much.

Price wars had nothing to do with why health-maintenance organizations (HMOs) left Rhode Island. They left because of solvency issues and inability to pay claims. History tells us that the most dramatic Blue Cross rate increases and reductions in benefits occurred not after Tufts and Harvard Pilgrim Health left the state, but in June 2002, when the last of the non-HMO carriers left -- eliminating alternatives for Rhode Islanders.

The non-HMOs left because of rules and regulations sponsored by the state Department of Health to protect Rhode Islanders from HMO failures, which had occurred a few years earlier. Rather than having the rules apply strictly to HMOs, however, they apply to "any health plan" in Rhode Island. (Rhode Island is the only state that has both a Department of Insurance and, now, the Department of Health regulating insurance companies.)

The main objection to these rules (and we are guaranteed that no non-HMO carrier will come back to Rhode Island as long as it has to comply with them) is that they force any company offering any health plan to be responsible for doctors' quality of care and malpractice. This includes the non-HMO plans that allow you complete control over your care, do not require a primary-care physician, and let you go to any doctor, anywhere.

These non-HMO plans have no relationship with or control over doctors. They simply pay the medically necessary expenses you incur. If you are unhappy with the quality of care you receive from one doctor, you are free to go to another. Because the insurance company doesn't limit your care, the company is not to blame if you receive less than satisfactory care.

Some plans provide options to use huge regional or national preferred-provider organizations (PPOs). However, they don't own or control these networks. In the end, it is your decision where you go.

Letting Rhode Islanders choose their doctors worked well with these plans for ages until Rhode Island decided to "get tough" with insurance companies, and its Department of Health created 23-17.13-CHP(HP) and R23-17.12-1-UR(UR) health-plan certification rules and regulations, to flesh out the General Laws 23-17.13 and 23-17.12-1, which now force the insurance company -- whether or not it controls the quality of care (as an HMO does) -- to be responsible for quality of care and malpractice.

Because of compliance issues with these rules, John Alden, a subsidiary of Fortis, one of the world's largest insurance companies, withdrew its permanent health plans from Rhode Island in June 2002, to concentrate more on friendlier states. Other non-HMOs followed suit.

The result was that thousands of Rhode Islanders lost their high-quality, very affordable health coverage -- sometimes up to 75 percent less expensive than Blue Cross for comparable or, in some respects, better coverage. The plans did not advertise and were available only through independent insurance agents, but they were available.

The underlying cause of Rhode Island's health-care crisis is just this regulatory issue -- which the Department of Health could easily remedy by modifying the rules and regulations so that they apply only to HMOs (or to gatekeeper plans requiring the use of a primary-care doctor), and not to non-gatekeeper plans.

After the carriers announced that they were leaving Rhode Island, and policyholders pleaded with the Department of Health to help, it refused. Instead, it said that the carriers had perhaps left for other reasons. Letters from carriers suggest otherwise -- not to mention information that agents have from close relationships with these carriers.

Furthermore, Rhode Island even has a model, New Hampshire, which went through a similar crisis several years ago, when it lost 29 health plans because of overly restrictive laws. That state was down to only one carrier for individual coverage, Anthem Blue Cross. It charged a 36-year-old male $300 a month for a plan with a $3,000 deductible.

Once the cause of the problem was pointed out to the New Hampshire legislature (by the National Association of Health Underwriters' New Hampshire chapter), and the legislators heard feedback from the carriers that had left, the laws were rolled back and companies began returning -- and the Blue Cross rates began to drop.

Fortis was the first company to return. Now Anthem Blue Cross charges a 36-year-old male $150 a month for a plan with a $1,000 deductible.

New Hampshire's example proves that competition solves health-care crises. It also proves that addressing the actual reasons carriers left Rhode Island is the key to finding the best solution to our crisis.

The Rhode Island chapter of the National Association of Health Underwriters has -- since before the carriers left the state -- kept Smith Hill informed of what caused Rhode Island's crisis; of what the legislative characteristics of a healthy state are; and of what is needed to get carriers and affordable options back to Rhode Island.

Nevertheless, insufficient action has been taken to effect measurable change. The good news, though, is that modifying the rules and regulations so that they apply just to HMO plans will bring carriers back, and this doesn't require legislators to get involved.

The bottom line is: The health-care task forces can continue to make things seem more difficult than they are by spending months and months researching unproven methods for possible solutions. Or we can keep it simple. We can fix the problem with proven methods, by addressing the actual cause of Rhode Island's crisis, the way New Hampshire addressed and solved its crisis.

Emily Harding is an independent insurance broker, principal of Health Plan Specialists, and president of the Rhode Island Association of Health Underwriters, the state's chapter of the National Association of Health Underwriters.