In the next few weeks, Gov. Lincoln D. Chafee is expected to issue an executive order creating a Rhode Island health-insurance-benefits exchange, a process recommended by the executive committee of the R.I. Healthcare Reform Commission on July 18 in a unanimous voice vote.
The move is an attempt to overcome the failure of the General Assembly to enact enabling legislation during its last session – and, more importantly, meet the funding deadline of Sept. 30 set by the federal government to be eligible for the next installment of financial support for establishing such exchanges. The latter is said to be worth up to $15 million, according to Lt. Gov. Elizabeth H. Roberts, who chairs the executive committee.
Once it is established by executive order, Roberts said, it’s possible the exchange could be converted into a quasi-public authority. But first, “we don’t want to miss the funding deadlines,” Roberts said.
The basic goal of the benefits exchange is to support the mandate under the federal health care reform law that everyone has health insurance. There are about 140,000 Rhode Island residents who are currently uninsured. “You need a place for them to buy it, and you need subsidies for those who cannot afford it,” explained Deborah Faulkner, of the Faulkner Consulting Group, who is the project director of the state’s efforts to design the mechanics of the exchange, working under a federal grant to the state Office of the Health Insurance Commissioner.
One of the principal tasks of the benefits exchange will be to determine eligibility: whether a person may be eligible for Medicaid coverage, or subsidies, and if not, how to buy coverage. All that will happen when individuals enter personal information, such as social security number, earnings, family structure and the like. “It’s a pretty complex thing that the exchange is being asked to do – determine eligibility for everyone,” Faulkner said.
“Massachusetts is ahead of the curve,” Faulkner explained. “They have one of the most respected online processes. … Their website is very good in helping people navigate the system. We don’t want to re-create the wheel.”
Rhode Island, along with other New England states, is working with Massachusetts under a $30 million grant in order to determine what technical capabilities and functions can be transferred from the current Bay State system and adapted to meet Rhode Island’s needs.
It’s great that federal grants are going to help pay for the start up of these exchanges, Faulkner continued. The work is in figuring out a design and operational model for an exchange that is financially sustainable.
The online portal of the health-insurance-benefits exchange also will be open to small businesses, and it promises to change the dynamic for buying insurance. Instead of purchasing health insurance directly from a commercial carrier, or working through a broker, the small-business owner will now be able to direct his employees to the exchange.
Through the exchange’s online portal, it is envisioned that employees of small businesses will be given a choice, not of one or two plans, but selecting within a tier of coverage, choosing from among many options for coverage, Faulkner explained.
“When you purchase health insurance through a carrier today, maybe you get one plan, or two plans to choose from, because of risk management,” Faulkner said. “The carrier will tell you that if you offer more than one product to a single small employer, you get bifurcated risk, making it unaffordable.”
Under the new benefits exchange, she continued, rather than picking a carrier, a small-business employee will be able to pick a plan from a tier determined by the employer. “The concept is to give employees’ choice in a way that encourages them to make cost-effective decisions about where and how they get health care,” Faulkner said.
Will it enable employers to step away from offering health insurance? “We don’t know; it may,” Faulkner admitted. “But there are strong tax incentives to encourage them to offer health insurance to their employees.”
According to two commercial insurers operating in the Rhode Island market, a health-insurance-benefits exchange by itself will not be a panacea for reducing the high cost of health care.
“It will improve access [but] will not affect the true drivers of rising insurance costs. At Tufts Health Plan, nearly 90 percent of the premium we receive goes directly to medical costs,” said Patti Embry-Tautenham, Tufts spokeswoman.
Kimberly R. Reingold, a spokeswoman for Blue Cross & Blue Shield of Rhode Island, concurred. “Changing how health care is purchased will not make it more affordable.” Blue Cross, she continued, has been focused on reducing costs for medical claims and administration.
From Faulkner’s perspective, Rhode Island faces a series of aggressive timelines and challenges to have its version of the health-insurance-benefits exchange up and running by 2014.
“We will need to prove readiness to the [federal government] by January 2013,” she said, with a goal of being fully operational by October 2013.
“It will be a challenge,” she said. •
