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.
Mr. Almon also emphasizes the need for the exchange to serve as an “active purchaser” and to engage in “coordinated health planning.” These buzz words would put the exchange, which would be housed in a state governmental agency, in charge of negotiating pricing with hospitals, doctors and other medical providers. While we share Mr. Almon’s concerns that the present fee-for-service model is flawed, we prefer to leave changes to the payment model with the carriers, with oversight by the Office of Health Insurance Commissioner. The wheels are already in motion locally toward a global payment model whereby providers are paid by the condition rather than the volume of treatments.
Rhode Island leads the nation in the percentage of patient-centered medical homes, which have proven to provide more effective and less expensive primary care coverage of individuals with chronic conditions such as diabetes and asthma.
We are concerned with the ultimate price tag of the envisioned exchange that requires everyone in and serves an activist purchasing function. The Massachusetts Connector Authority covers more people than envisioned by the Rhode Island exchange but with less responsibility than the exchange promoted by Mr. Almon.
We are in favor of an exchange that focuses on those in the population who need the exchange most, that is, the uninsured, Medicaid recipients and those in line to collect premium credits from the federal government.
The exchange should also be made available as an option to small employers, not a mandate. Utah has been successfully enrolling small businesses in its exchange this year by providing a “defined-contribution” model whereby businesses decide on a dollar amount contribution per employee and the employee then selects his/her plan from among the many plan offerings.
The role of the benefits adviser will be even more pronounced as the exchange ultimately comes into focus. Health care purchasing is never as easy as clicking a button. Health care illiteracy is often a serious problem – thus, employers and employees rely on benefit advisers to help them with benefit questions, claims advocacy, communication and compliance issues.
We look forward to working with Mr. Almon and the rest of the exchange committee in building an exchange that is transparent and effective; one that meets the needs of individuals and ultimately earns the business of small employers in Rhode Island. •
Jim Borah is the president of the Rhode Island Business Health Advisors Council. James Raiola is its vice president, Mike Gemma is its secretary, and Rover Calise is its treasurer.
