Ferguson: Exchange can benefit small business

Christine Ferguson is so enthusiastic about the state’s new health-benefits exchange that she mistook a summit on its offerings co-sponsored by Providence Business News for a wedding. But it wouldn’t be surprising to find Ferguson, HealthSourceRI’s executive director, at a wedding explaining the exchange and asking for business cards.
She says she will go anywhere she needs to in order to make the exchange a success. She even offered to be a guest preacher at a Presbyterian church. Recently she wandered out of a beauty shop with foil still in her hair. She left to grab the exchange-rates sheet so she could explain the system to her hairdresser.
At the Sept. 25 summit at the Crowne Plaza Providence-Warwick attended by 400 business owners, human resources professionals, insurance brokers and others, Ferguson said Rhode Island is one of only three or four states expected to be up and running by Oct. 1, when state exchanges were scheduled to open. Ferguson’s responses as part of a panel discussion formed the core of the two-and-a-half hour summit, produced by PBN in partnership with HealthSource-RI and a number of other sponsors. But the single most important aspect about Rhode Island’s exchange is that it is the only one with a primary focus on small business, Ferguson said. Rhode Island is the only state implementing the full employee-choice model, whereby employers select a reference plan and set a contribution amount, which employees can apply toward any of the 16 small-business plans sold on the exchange.
“This is a critically different thing than any other state in the country is doing,” Ferguson said. “At the end of the day, we need to get at the issue of reducing costs. And the only way we can get to that place is at a point in time where individuals can actually influence the cost of health care.”
“If we do this well every single person in Rhode Island will understand that the choice they make … has the potential of reducing cost,” she said.
So will costs go down? Not in the short-term, the panelists agreed. Some individuals may see lower costs, particularly those who are eligible for federal subsidies. But there will also be losers, including young people who will have to pay more.
But in the long-term, the exchange may allow for innovation that will eventually control, if not reduce, costs, several panelists said.
“People have this notion that we’re taking cost out of the system, what we’re really trying to do is [deflect] the level of increase in cost,” said Peter Andruszkiewicz, president and CEO of Blue Cross & Blue Shield of Rhode Island. The way to achieve this goal is to change the way care is paid for, he said. The current payment system – fee for service – creates incentives for providers to perform more procedures, he said, which doesn’t necessarily translate into quality care. The hope is to move toward a system in which the incentives of patients, providers and payers are all aligned.
Toward this end, Blue Cross is offering a plan on the exchange that changes the incentives, rewarding customers with a 6 percent to 8 percent discount if they visit Patient Centered Medical Homes and have laboratory testing or radiology services performed at cost-effective locations.
Andruszkiewicz was optimistic about the timeline for this change, estimating that it could happen in the next “several” years.
Kathleen Hittner, Rhode Island health insurance commissioner, offering the provider perspective, said she feels the state is moving “exactly in the right direction,” toward improving the affordability of health care. She announced that her office was recently awarded $2.7 million to continue assessing rates so that the public has the information it needs to make good decisions.
But if premium costs won’t be lower on the exchange, then small businesses aren’t likely to participate, said Philip Papoojian, chairman of the Smaller Business Association of New England and president and chief operating officer of Mereco Technologies.
Papoojian said he and other small-business owners he has spoken with have a “wait and see” attitude about the exchange. They’ve seen a dramatic increase in the costs over the years and maintaining competitive health-insurance plans is crucial to drawing good employees, he said. If the exchange offers lower premiums and better benefits, he would consider it.
But even that’s the case, he expressed concern about his employees’ ability to understand the complexity of health insurance and choose their own plans. Education and working with brokers will be crucial to making the exchange succeed, he said.
Patrick Canavan, senior vice president of employee benefits at USI Insurance Services, praised Ferguson for preserving a role for brokers on the exchange.
Arguing for the user-friendliness of the exchange, Ferguson said that it only took 10 minutes for her to explain to her hairdresser the different options that she would have on HealthSource-RI and another five minutes for her hairdresser to pick out a plan. She also noted that consumers can contact the call center for help choosing a plan and throughout the year if problems arise. Employees whose employers opt for the full-choice model will be able to call the center seven days a week. Mondays through Saturdays, it will be open from 8 a.m. to 9 p.m. and Sundays from noon to 6 p.m. Prices will be the same on and off the exchange, Ferguson noted, but the call-center services and extent of employee choice only exist on the exchange.
HealthSourceRI will collect a single check for each consumer, which will then be put into a trust and from there redistributed to carriers, she said. Rhode Island will likely be the only state, she said, that will be ready to accept and distribute payments Oct. 1 when the exchange opens.
Larger employers, those with 50 employees or more, will be able to start purchasing insurance on the exchange by 2015 under federal law, Ferguson said. But if large employers are interested in that happening sooner, that change is possible at the state level, she said.
In the question and answer session that followed the panel discussion, audience members expressed further concerns about the cost of health care.
Lisa Garabedian Regan, vice president of Bliss Properties, who identified herself as a “paternalist employer,” said insurance is the reason why her employees work for her company, and they trust her to pick the best plan. Burdened by the state’s tax structure, she and other small businesses are on the “cynical side” when it comes to health insurance, she said.
Ferguson said since her father died she has been helping her mother, who took over her husband’s small business. So she understands the relationship between employers and their employees, Ferguson said.
While other states pushed the small-business piece off, she said, her personal experience has informed her focus on small business within the exchange.
“I will not allow us to do things that are going to hurt small business,” Ferguson said.
“My hairdresser and your employees, they all really know what has to happen and they want to do it, they’re ready,” she said.
“Please, please do not let your cynicism of the system stand in the way of taking advantage of a moment in time when Rhode Island could be the best in the country,” she pleaded. “Every single ingredient that we have in this state is going to make that possible.” •

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