Volume, price keep some bizs away from exchange

Jason Cardoza, owner of Truckers America LLC in North Kingstown, wasn’t scared off by the horror stories about health-exchange websites across the country or the potential risk of trusting his employees’ insurance to an untested government information technology system.
This past winter, Cardoza went online, from his smartphone no less, and purchased a Blue Cross & Blue Shield Rhode Island health plan for his four-full-time workers through HealthSource RI. It wasn’t difficult, he said, and the only thing he had to do offline was choose a broker.
“For me it was easy, but I’m pretty good with computers,” said Cardoza, whose company recruits drivers and trucking managers nationally. “The premiums are less, about $350 per month [for the company] than I was paying before.”
Of all the health-benefit exchanges created through the Affordable Care Act, Rhode Island was one of the few to even attempt to serve employers in the group market.
But although HealthSource RI is recognized as one of the most successful exchanges in the country, contrasting sharply with calamitous efforts as nearby as Massachusetts, attracting businesses to use the system has proven much more difficult than convincing individuals to try it.
As of March 31, the most recent figures available, Truckers America was one of only 175 Rhode Island businesses to have purchased health plans through the exchange, compared with 21,097 individual and family plans sold.
While the exchange has added businesses each month – there were 133 enrollments as of March 8th – the current pace would draw no more than several hundred enrollments at best by the end of the exchange’s first year.
Given the uncertainty of government funding for the exchange once federal dollars run out next year, the state’s experiment in the group market could become precarious if lawmakers begin looking for places to cut HealthSource’s $23 million annual budget.
Still, HealthSource Executive Director Christine Ferguson refuses to see the enrollment numbers as anything but successful and is pushing ahead to get more small-business owners to use the health exchange.
“When you think about everything that was going on in November and December in the political arena, it is not surprising businesses were nervous,” Ferguson said. “We had a good head of steam and with the talk nationally about [healthcare.gov] we lost some of that. We are having to do some education because this is a massive change. What we are seeing is a growing number of businesses understanding and participating and learning.” Ferguson continues to stay away from setting any kind of specific small-business enrollment targets for the exchange, although she says she has some that she keeps to herself.
Perhaps the most disappointing part of the recent HealthSource business numbers are the large number of companies, 1,144, that have initiated applications on the exchange but never completed them.
By comparison, on the individual market HealthSource has facilitated 21,097 paid enrollments versus 6,864 applications started that haven’t been finished.
Why have so many businesses started applications and stopped short of buying insurance?
Ferguson said many of the applications started on the group-plan side are likely fact-finding missions by company managers and brokers who want to see how it works.
“Businesses renew on a monthly basis, so we are fairly certain on an anecdotal level that many who started may not have renewals until the middle of the year, but they went on to get a feel for what the model was,” Ferguson said. “Brokers probably tested it out too and I think that was a big chunk of it.”
Perhaps the bigger question is whether small businesses, after seeing the choices available on HealthSource, like what they see.
Both the big selling point for and public-policy objective behind HealthSource’s small-business effort is its “employee choice” option that allows individual workers to choose from among 16 plans from different carriers and, if they are more expensive, pay any difference between it and their company default plan.
As of March 31, 103 of the 175 businesses using HealthSource had enrolled in employee choice.
The idea is that giving individual workers information about their insurance and a chance to pick between carriers will remove the opacity from the market and ignite competition among carriers.
In an apparent reaction to HealthSource, United Healthcare of New England in February announced plans to open a private health exchange featuring a range of its own offerings. Ferguson said Blue Cross is working on something similar. “It is a great proof of concept from United that employee choice is critical,” Ferguson said. “But what most businesses don’t understand is that these [private exchanges] only allow them to choose one carrier. Real competition is when employees can choose between carriers as well as between plans. That ability to change and have a seat at the table is what will bend the cost curve.”
Kevin Lovett, a senior vice president at broker Gencorp Insurance Group in East Greenwich, said the problem for HealthSource on the group market is that it’s unclear that most employees want to sift through 16 different plans, even if they have the knowledge and sophistication to effectively analyze them.
“To have 16 different plans is overwhelming and [HealthSource] will find itself competing with private exchanges limited to between three and five really good plans,” Lovett said. “Depending on the education level and sophistication of employees, [employee choice] can be problematic and protract the process of the renewal.”
Even worse, Lovett said, carriers are keeping their best plans off HealthSource and only making them available to employees who buy from them directly.
The HealthSource plans are largely co-insurance designs that include out-of-pocket costs for employees even after deductibles are met, which hasn’t been popular in Rhode Island so far, Lovett said.
Another major incentive built into the exchanges was the ability for companies with less than 25 workers to receive federal tax credits, but those are set to expire in 2016.
At American Trucker, Cardoza said although his business has four full-time employees (plus about 20 contractors across the country) he doesn’t know yet if he will qualify for the tax credits.
And although the idea of employee choice attracted him to HealthSource, all of his workers have chosen the default, he said.
Still, Cardoza recommends the exchange to other small-business owners.
“The fact that its geared toward small business and only available to small businesses made me want to see how easy it is and whether it could work for us,” Cardoza said. “At some point we hope to grow into a big business, but right now we feel like we ended up with a better plan.” •

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