The folks in Missouri have decided to take a different approach from mandates and The Connector of Massachusetts. Some of us have had numerous discussions with people involved in getting the new law (HB 818) passed, especially the tireless Beverly Gossage who is as good a spokesperson as anyone could want. Missouri’s approach is so good and such a model for other states that it should change its motto from “The Show Me State” to “The Show Us (How to do it) State.”

Essentially, they changed state law to enable small employers to set up Section 125 plans, funded by both employers and employees, and allow workers to buy individual coverage with those tax-free funds. Most states currently consider that any coverage partially funded by employers is automatically “group” coverage and therefore subject to minimum contribution requirements, minimum participation levels, rating restrictions, mandated benefits, guarantee issue laws, and a host of other expensive regulations.

This new law allows an employer to simply make a contribution to the premium costs of a worker’s own individual plan. The worker may select any plan available in the non-group market. It is completely portable and “owned” by the employee. There is no “Connector” dictating what the market may offer. There is no mandate requiring workers to purchase coverage (but if they don’t they will forfeit a significant benefit of their job).

Employers benefit because they are freed of the burden of selecting one plan that pleases all the workers, and they may contribute whatever they can afford to the cost of coverage. They have no responsibility to even know what sort of coverage the worker is buying. All they have to do is establish the 125 program and pay their contribution into it.

Ms. Gossage reports that carriers are already making premium and underwriting concessions to attract this new population of active workers who are also well-subsidized and financially stable. She adds that Missouri also is making HSAs available to state employees for the first time and the insurance department will make information available about this new opportunity.

Jason Hannasch of the Show Me Institute had an op-ed in the St. Louis Post-Dispatch in which he praised HB 818 and cited his own experience as a small employer in trying to get coverage for his employees. He says, “Until a few days ago, Missouri’s health insurance laws were relics of the 1940s, biased towards big businesses with one-size-fits-all health plans.” But now, each employee wil be able to choose the plan that is best or their own family.