PROVIDENCE – The announcement by Stephen Farrell, president and CEO of UnitedHealthcare of New England, at a meeting of the Health Insurance Small Employer Taskforce last week that United planned to open a private health insurance “exchange” is part of a broader trend both in New England and nationally that is seeing insurance carriers and brokers expand their presences beyond the traditional health insurance marketplace.
United’s decision and its plans were confirmed by spokeswoman Maria Gordon Shydlo.
“UnitedHealthcare has a long history of bringing innovative, cost-effective health and wellness solutions to Rhode Island businesses,” Gordon Shydlo said. “Later this spring, we will begin offering a new benefits package that enables Rhode Island small businesses to provide employees greater choice in their health benefits, while still addressing employers’ cost concerns. Employees will be able to select from a wider variety of UnitedHealth plan options than what is currently available to them, empowering them to pick ones that best meet their health and financial needs.”
A nuance in United’s positioning is the fact that the company intends to retain its presence on the small business section of the state’s health benefits exchange, HealthSource RI. What United is offering will be greater choice among its own products. The downside for business owners is losing the federal subsidies that enrolling through HealthSource RI’s Small Business Health Options Program can offer.
“The popularity of private exchanges is taking off around the nation,” said Robert Hackey, director of the Health Policy and Management Program at Providence College, “so it’s no surprise that United elected to offer such a product here. Cigna is opening private exchanges in Atlanta, Dallas, Washington, D.C., and San Francisco.”
Various benefits managers, also known as “mega-brokers,” including Aon Hewitt, are opening private exchanges as well, according to both Hackey and Patrick Canavan, senior vice president of employee benefits at USI Insurance Services. Canavan has also seen carriers rolling out private exchanges for small businesses, including one created by Blue Cross of Massachusetts.
Canavan indicated that Blue Cross & Blue Shield of Rhode Island may elect to do likewise in the Ocean State.
“Nothing has been announced, but it would logically follow that they would have a private exchange product released here in the near future,” Canavan said.
Canavan said that full employee choice, highly touted by Christine Ferguson and HealthSource RI, has proven to be something of a difficult sell.
“We like the idea of having full employee choice and being able to choose between multiple vendors,” Canavan said. “But having an employer explain 16 plans to their employees is more than a little overwhelming. A private exchange allows a company to offer anywhere between three and five plans to their employee population.”
The private exchanges represent a return to an older practice, according to Canavan. “It’s like the old flex-enrollment systems that were popular 10, 20 years ago, rebranded and re-released, and having more options than have typically been offered of late,” he said.
All major health insurers in Rhode Island – Blue Cross, United, Tufts Health Plan and Neighborhood Health Plan of Rhode Island – will be participating in some form of the small business exchange by 2015, although Canavan wondered “how fully committed they are remains to be seen.”
Canavan said that HealthSource RI may or may not be sustainable in its current form. “They were saying $18 million to $24 million to run the exchange,” he said, “and given the current enrollment, it’s going to be an uphill battle for them to justify that spend. It just seems like an awful lot of money to support an exchange that’s benefitting relatively few people.”
Broker William Delmage, president of WD & Associates, said that no one could fault HealthSource for its outreach to small businesses.
“HealthSource RI has done an outstanding job reaching out to the community educating them on the exchange,” Delmage said. “They have used all sources of the media, including small town-hall type meetings that I have attended.”