The governor's plan to reduce the uninsured rate in Pennsylvania with money from the state's Blue Cross plans won't do the job, business leaders say, because it will force more companies to drop their health coverage as rates rise further.

But the state official responsible for the agreement disputed that assertion yesterday, saying there was no quid pro quo that gives the Blues free rein to pass along the cost of the new program to employers by way of higher premiums.

Gov. Ed Rendell announced Monday an agreement that creates a formula by which the charitable giving of the Blue Cross plans will be calculated, and dedicates much of the money to the uninsured. Insurers backed the agreement because they have a serious image problem in the state, said Rosemarie Greco, director of the governor's office of health care reform.

"Although everyone knows the Blues ... the Blues are also greatly disliked," Greco said, citing public comments received by the Department of Insurance about the huge reserves the insurers have amassed. The state plans to unveil today its study of whether the reserves held by the Blues -- including Highmark's reserve of $2.2 billion in 2003 -- are too high.

"Since I come from the banking community, I likened this to the experience that banks had with people accusing them of redlining -- not granting loans to certain businesses in certain communities -- and banks responding by entering into community banking reinvestment programs," Greco said.

Greco, who previously served as chief executive officer and president of the former Philadelphia-based CoreStates Bank, said negotiations between the state and the Blue plans began four months ago and led to the new community health reinvestment agreement. The plan, unveiled Monday, calls on Highmark Blue Cross Blue Shield and the three other Blue Cross plans in Pennsylvania to give nearly $1 billion over six years to a variety of community health programs.

Sixty percent of the money will support the state's adultBasic health insurance program for the working poor, or similar state-directed efforts for people who can't afford private health plans. That means another 29,000 people will be covered through the program this year, Rendell said Monday.

Republicans criticized the plan as a tax on companies that buy Blue Cross insurance policies, a theme reiterated by Cliff Shannon, president of the Churchill-based SMC Business Councils, a lobby representing smaller businesses and manufacturers. Additional money from the Blues for the uninsured will simply come from the pockets of companies that are already struggling to cover premium costs, Shannon said.

"It ought to be abundantly clear to everyone that this huge protection payment will grease the skids for approval of the Blues' future rate increases and other regulatory needs -- with no questions asked," Shannon said. "Expropriating $1 billion in private health insurance funds in order to put a temporary band-aid on a terrible crisis is poor public policy."

For its part, Highmark disagrees with both assessments.

The Blue Cross Blue Shield brand is plenty strong in Pennsylvania, said David O'Brien, Highmark's executive vice president for government services. Highmark agreed to the plan because it recognized the crucial need to expand enrollment in adultBasic, which has a waiting list of about 100,000 people, O'Brien said.

Also, while Highmark previously had a state-approved formula to determine its charitable contribution, the other three Blue plans didn't, O'Brien said. So, the company agreed that all four plans should work with the state on a common definition of the insurers' social mission.

As for the source of the money, Nanette DeTurk, senior vice president for finance, said it wouldn't be coming from premium increases.

"This will not be passed on to the groups," she said. "This will be taken out of surplus."