HealthLeaders- InterStudy, a leading provider of managed care industry intelligence, reports Gov. Edward Rendell's proposal to ban medical underwriting in Pennsylvania is reopening a rift between the state's Blues plans and for-profit insurers. According to the latest Pennsylvania Health Plan Analysis, the administration's Prescription for Pennsylvania healthcare reform package requires all health insurers to use "adjusted" community rating for small- group and individual policies, meaning underwriting would be limited to risk factors relating to age, geographic region and family size, and no consideration for medical history and gender.

"The argument is that insurers using medical underwriting cherry pick the healthy customers, leaving older and sicker people in community-rated plans, and thereby increasing rates for them," states Chris Lewis, HealthLeaders- InterStudy market analyst and author of the report. "But the for-profit plans in Pennsylvania counter that they need underwriting discretion to compete against the dominant Blues plans and to provide choice to consumers."

With two attempts at small-group reform failing two years ago, the state's Blues plans are hoping community rating will finally pass this year. The state's for-profit insurers feel the implementation of a community rating will stifle competition. Blues insurers, however, argue that banning medical underwriting would create more stable and affordable rates for small companies at risk of being priced out of the health insurance market.

Business groups are also divided over the issue. The National Federation of Independent Businesses opposes the community rating measure as hurting small businesses, while SMC Business Councils, a Pennsylvania business association, has been arguing for community rating for years.

  Other news in the Pennsylvania market:   -- State officials are moving forward with the decision to scrap the      voluntary managed care Medicaid program for people on Medical      Assistance, saying the move will save money; health plans, however,      fear the move is the beginning of the end of managed care at a fixed      amount in the state's Medicaid program.   -- Northeast Pennsylvania is emerging as a new hot spot for health plan      expansion, as both Aetna and CIGNA HealthCare working to penetrate the      market with both HMO and PPO products targeted at small and large      employers.    About Health Plan Analysis 

Health Plan Analysis identifies key health plan trends, allowing healthcare businesses to create comprehensive strategic plans and sales strategies at state and local levels.

About HealthLeaders-InterStudy

HealthLeaders-InterStudy is the authoritative source for managed care data and analysis. For more information, please visit www.HealthLeaders-

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SOURCE: HealthLeaders-InterStudy

Contact: Kelly Morphy of HealthLeaders-InterStudy, +1-615-369-4818, or

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