Business leaders and policymakers have long debated what would happen if Rhode Island had more than two commercial health insurers. Would premiums go down? Would providers get paid better? Would the quality of health plans be higher?

Now, with Tufts Health Plan in the pipeline to re-enter the state’s insurance market after nine years’ absence, an answer may be forthcoming.

The Watertown, Mass.-based nonprofit, a health-maintenance organization (HMO) with about 680,000 members, applied June 6 for approval from Health Insurance Commissioner Christopher F. Koller’s to resume offering coverage in the Rhode Island market.

The review process takes 30 to 60 days, according to Koller’s spokesman Matthew Stark.

In an interview, Tufts President and CEO James Roosevelt Jr. said the company would like to start covering Rhode Islanders effective Jan. 1.

“We’re looking at all sizes of employer, and ultimately to individuals,” Roosevelt said. “But I don’t think we’ll be offering to individuals in year one. And aside from a few large employers and government, since Rhode Island is mostly a small-group market, that will be our focus in the first year.”

Tufts left Rhode Island in November 1999, just as Roosevelt was joining the company, and almost at the same time as Harvard Pilgrim Health Care of Rhode Island was shutting down.

But while Harvard Pilgrim was shutting down because of financial difficulties, Roosevelt said, Tufts was making a profit here and “always had a good relationship with both providers and subscribers.” Tufts had business problems in northern New England, however, he said, so it pulled back into its core market, Massachusetts, to recover.

Now, with its membership growing well beyond the boost that all health plans have gotten from the Bay State’s health reform – about 9 percent last year, Roosevelt said – Tufts Health has been looking to expand even more, and Rhode Island, he said, looked most promising.

“We have done very well in growing and lowering costs in Massachusetts, and as we’ve looked around the New England region, Rhode Island really stands out for only having two insurance companies of any significance,” he said.

But can Tufts Health Plan compete with Blue Cross & Blue Shield of Rhode Island, which has roughly as many members but overwhelmingly dominates the local market? Isn’t UnitedHealthcare of New England, Blue Cross’ sole competitor here, in an unusual position as a national giant?

No, Tufts can do this, Roosevelt said.

“We are very used to competing with Blue Cross [& Blue Shield] of Massachusetts, which also has a very large market share,” he said. “We find we can compete well by offering products that have better value and by having higher quality ratings.”

Last year, Tufts Health was named the No. 2 health plan in the country for both HMO/POS combined products by U.S. News & World Report and the National Committee of Quality Assurance, based on measures of clinical performance and member satisfaction.

Tufts has also excelled at containing costs. It has the lowest annual cost growth trend in Massachusetts, about 50-percent lower than its competitors, Roosevelt said, and it has worked to design plans that are low-cost and promote the use of primary care. It also uses managed-care strategies such as mandatory referrals for specialist care and communicates extensively with its members to ensure they are engaged in caring for themselves and keeping costs low.

“It’s managed care without the restrictions that people didn’t [always] like,” he said. “It’s had a real impact on getting the right care in the right place at the right time.”

The company’s reputation precedes it, so the prospects for its application look good.

“Tufts is a well-regarded regional health insurer,” Stark, of the health insurance commissioner’s office, said in a statement. “Rhode Island’s health insurance statutes require health insurers to protect consumers, be financially solvent, treat providers fairly and work to improve our health care system. We look forward to working with Tufts to ensure it meets those expectations as we review their application materials.”

There is one more snag: Tufts Health Plan is watching the General Assembly to ensure that a bill is passed to eliminate the use of “health status” as a rating factor in small-group health insurance. The current law allows its use – but only to insurers that are grandfathered in.

Roosevelt the HMO doesn’t use health status as a factor in Massachusetts, where that would be illegal, but it is neutral on the subject in Rhode Island, so long as there’s an “even playing field.” Both the House and Senate have passed legislation to ban the use of that factor, but the bills have to be reconciled and one or both versions have to be approved by both chambers.

“The fact is that no competitor, no matter how high-quality or efficient they are, is going to be able to do business in the small-group market in Rhode Island unless this legislation passes,” Roosevelt said.

Meanwhile, Tufts is talking with providers to begin negotiating rates, he said. If all goes well, expect a third option to be available to employers as they prepare to renew their policies for next year. “We think it’ll be slow,” Roosevelt said, “but totally doable.” •

The R.I. Office of the Health Insurance Commissioner was established by legislation in 2004 to broaden the accountability of health insurers operating in the state of Rhode Island. For more information, go to www.ohic.ri.gov.

Tufts Health Plan is a nonprofit health-maintenance organization (HMO) based in Watertown, Mass. For more information, go to www.tufts-healthplan.com.