In an Aug. 25 editorial on Sen. Edward Kennedy's legislation that would require all employers to provide an employee health insurance package, The Post concluded that "the alternative is to do nothing." This conclusion is groundless.

The complexity of the problem is largely a function of the uninsureds' heterogeneity. Approximately one-third of the uninsured are poor (i.e., have a family income below 100 percent of the federal poverty level); one-third are near-poor (between 100 percent and 200 percent of the poverty level); and one-third are nonpoor (above 200 percent of the poverty level).

The uninsured are also distributed across all types of family structures. While most are in some way related to the work force as either workers or dependents of workers, they could be poor or nonpoor. Furthermore, uninsured workers and their families are concentrated among certain industries and are disproportionately represented among smaller establishments. All this makes any single solution difficult.

We see the need to address the unique needs of the various subpopulations within the 35 million uninsured with a range of solutions.

First, for high-risk individuals who are uninsurable, we support the expansion of state-operated pools to ensure access for those who can afford private-sector coverage but are currently denied coverage for health reasons.

Second, small businesses must be given greater incentives to provide coverage for their employees. Self-employed individuals should get a 100 percent deduction for their health insurance protection, as long as they provide equal coverage to their employees.

Third, the Employee Retirement Income Security Act preemption of state-mandated benefits should be extended to insured employee plans as well as to self-insured plans, thereby allowing equity in insurance. Insurers should have the flexibility to design less expensive benefit packages to attract voluntary participa-tion.

Fourth, Medicaid should be expanded to cover all persons otherwise eligible for Medicaid if their income is below the federal poverty level.

Fifth, the near-poor could be allowed to purchase Medicaid on an income-related, perhaps subsidized, basis if not covered by an employer plan.

It is unwise to propose a single solution -- namely, employer-mandated insurance with a system of untried regional risk pools. Sen. Kennedy's proposal fails to meet the needs of at least 45 percent of the uncovered population. An employer-mandated system overlooks the government's failure to develop comprehensive coverage of the poor through Medi-caid. CARL J. SCHRAMM President Health Insurance Association of America Washington