Business groups push self-funded model for HealthSource RI

Four Rhode Island business groups sent a statement to Gov. Lincoln D. Chafee and state legislators on Tuesday asserting that HealthSource RI should be funded only by those individuals and small businesses that obtain insurance through the exchange. More

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Business groups push self-funded model for HealthSource RI

THE RHODE ISLAND Island Business Group on Health, the Greater Providence Chamber of Commerce, the Rhode Island Manufacturers Association and the Rhode Island chapter of the National Federation of Independent Business have joined forces to support a self-sustaining model of funding for HealthSource RI after the exchange exhausts the $84 million in federal grant money received.
Posted 1/22/14

(Updated, 12:52 p.m.)

PROVIDENCE – Four Rhode Island business groups sent a statement to Gov. Lincoln D. Chafee and state legislators on Tuesday asserting that HealthSource RI should be funded only by those individuals and small businesses that obtain insurance through the exchange.

The respective leaders of the Rhode Island Business Group on Health, the Rhode Island Manufacturers Association, the Rhode Island chapter of the National Federation of Independent Business and the Greater Providence Chamber of Commerce each signed the statement, which argued that alternative methods of funding for the state-run exchange – such as assessing a fee on all insurance carriers, or charging a general assessment on all health claims paid in the state – could harm the Rhode Island business community.

“We the undersigned are steadfast in our position that the cost of operating HealthSource RI should be fully born by the individuals and small businesses who obtain their insurance through the exchange,” the statement read. “The cost should not be passed on to businesses (directly or indirectly) who do not obtain insurance through the exchange. A fee on all insurance carriers or all health purchasers or an assessment fee on all claims paid in the state is not acceptable to our members.”

An acceptable form of funding for HealthSource RI would be user fees charged to individuals and small employers who utilize the exchange, the business groups said, which would fulfill the legal stipulation that the exchange be “self-sustaining.” The groups urged the R.I. General Assembly not to tax businesses to fund the exchange, and said they would “strong resist efforts to cover these costs through assessments on anyone other than the users of the exchange.”

The 2011 executive order signed into law by Chafee to establish HealthSource RI explicitly ruled out accessing general revenue funds for the continued expense of maintaining HealthSource RI after it exhausts its initial federal outlay of $84 million later this year. However, although the Affordable Care Act requires state exchanges to be self-sustaining by Jan. 1, 2015, Chafee’s proposed fiscal year 2015 budget did not establish any funding mechanism for the exchange.

HealthSource RI Executive Director Christine Ferguson has estimated the annual cost of maintaining the exchange to be between $17 million and $24 million. Ferguson did not immediately respond to a request for comment on the business groups’ statement.

Laurie White, president of the Greater Providence Chamber of Commerce and one of the statement’s four signees, told Providence Business News that Chafee must honor the commitment he made to the state’s citizens when he signed the bill creating HealthSource RI in 2011.

“The original and stated intent was for the exchange to be supported by its users,” White wrote in an email. “We very much like Director Ferguson’s goal to use the exchange to provide transparent and predictable pricing. That will be an asset in attracting and retaining companies. The cost of the exchange itself, however, must be modest.”

Donald Nokes, president of the Rhode Island Business Group on Health, speaking for his own group, cited a perception that the rules of the game are being changed mid-course, and that there is an issue of fairness to consider.

“I don’t believe anyone likes the idea of changing the rules in the middle of the game,” Nokes wrote in an email. “Many businesses supported the concept of the exchange when it was presented as a self-supporting agency. I initially advocated for building an exchange in Rhode Island that met the minimum requirements of the Affordable Care Act and expanding the functions as we experienced an appropriate participation rate.”

Samuel Slade, USI Insurance Services’ president and practice leader for Rhode Island employee benefits, said the statement represented an impasse between two conflicting visions for HealthSource RI.

“I believe that the business community here has been pretty consistent in their desire for an efficient approach to implementing the requirements of the Affordable Care Act,” he said. “I think it is more surprising that the governor did nothing in his budget to provide for funding.”

“[Ferguson] has tried hard to sell the business community on her vision for the exchange,” Slade added. “This announcement suggests that those efforts have been unsuccessful.”

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