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As active participants in the health insurance exchange discussions here in Rhode Island, we read Ted Almon’s recent opinion piece (“If designed right, health exchange can save money,” Aug. 8, 2011) with great interest. Some of us have had the privilege of interacting and knowing Mr. Almon for the last few years, as our paths have crossed on various health care committees.
We agree with Mr. Almon that the exchange needs to ultimately save on health care costs, and it needs to make financial sense, as it will be expected to be self-sustaining long-term. We share his concern that one of the state’s consultants, Jon Kingsdale of the Wakely Consulting Group, doubts an exchange in Rhode Island can fulfill cost-reduction expectations. Mr. Kingsdale previously led the Massachusetts Connector Authority, which has been successful in enrolling subsidized individuals but has failed to attract the attention of small business and has proven unable to reign in runaway health care costs.
While we agree with Mr. Almon on many points, we respectfully take issue with a couple of his arguments. The first involves his assertion that volume drives costs. In Mr. Almon’s view, the exchange needs to be mandatory for virtually all Rhode Islanders, including employees of cities and towns and for all employees of small business, eventually expanding to large businesses.
In practical, real-life terms, an exchange in Rhode Island will not be able to serve the entire population – particularly state and city municipal employees, because of their collective bargaining agreements. Often these agreements are for three-year terms and carry strict conformity language which has been upheld throughout the state court system. Thus, unless the exchange is ready to match terms for every single city and town, the inclusion of these employees in an exchange is highly unlikely.
Even if Mr. Almon were granted his wish and all Rhode Island insureds were covered by the exchange, we believe the current health insurance market in Rhode Island serves to disprove his thesis that volume necessarily begets savings. The state’s insurance market is currently dominated by Blue Cross & Blue Shield of Rhode Island, as it covers all individuals and approximately 70 percent of the commercial market. Yet, both UnitedHealthcare of New England and Tufts Health Plan win their share of small and large group clients due primarily to pricing advantages.