Wait and see for bizs on exchange

Shedd
Shedd

Daniel Shedd, president of Taylor Box Co. in Warren, is optimistic about the long-term prospects of HealthSource RI, the state’s new health-benefits exchange, and expects most small businesses will eventually use it to get insurance.
Still, Shedd isn’t ready to buy health insurance for his 45 employees through HealthSource RI just yet.
“At the end of the day, I have to do best by my employees and deliver the most within the budget I have for health insurance,” Shedd said. “I just don’t know that [the exchange is] ready.”
Shedd’s wariness to thrust his employees into a brand-new, untested insurance marketplace is shared by many Rhode Island small-business owners watching the exchange in its first year of enrollment.
Unlike Healthcare.gov, the federal health-insurance exchange created by President Barack Obama’s Affordable Care Act, HealthSource RI launched this fall without widespread technical and operational failures.
With only a few glitches, the Rhode Island exchange enrolled more than 4,400 individuals in health insurance (3,200 in Medicaid) during its first month of operation, one of the better enrollment rates in the country.
But getting businesses to use the exchange, as well as individuals, is a major reason Rhode Island spent $84 million in federal grants to build HealthSource RI and expects to pay an estimated $26 million each year to run it.
And so far many small businesses – right now only those with fewer than 50 full-time employees can use HealthSource RI – are proving a tough sell.
“For small businesses, the public exchanges are not a slam dunk by any stretch,” said Samuel B. Slade, president of the employee-benefits division of USI of Rhode Island, an insurance broker. “The folks in Washington are making Rhode Island look good, because HealthSource RI is more or less functional. … But I do think enrolling people is easier than providing them with insurance cards, accurate billing and subsidies. The hard work is yet to come.”
Slade and other brokers, who arrange insurance for about 80 percent of group plans in the state, say most clients are choosing to stick with nonexchange insurance, at least in the short term. And when asked for advice, Slade said he is only pushing clients toward the exchange if they qualify for a series of exchange-only federal tax credits Although HealthSource RI has yet to provide any hard enrollment data for small-group plans, Executive Director Christine Ferguson acknowledged that getting businesses to enroll has shaped up as a major challenge.
“We saw a tremendous amount of interest among small businesses in September and October and then when there were problems at the federal level we began seeing some concern about whether they should come on to the exchange,” Ferguson said. “Getting over that hurdle of ‘Obamacare is messed up’ … has proven difficult.”
Ferguson said more than 500 small businesses have at least created accounts on HealthSource RI – up from 471 on Nov. 12 – but she wouldn’t say how many of those accounts have moved to enrollment or payment for insurance.
The first group plans purchased through HealthSource RI will not go into effect until Jan. 1, and companies enroll or renew insurance all through the year, meaning it could be some time before it becomes clear how popular the idea is.
But while Ferguson declined to say how many small-group enrollments would be considered successful, she said it is crucial that a significant share of Rhode Island businesses use the exchange to get insurers competing for worker premiums.
In 2014, premium prices in the 16 small-business group plans on HealthSource RI – from Blue Cross & Blue Shield of Rhode Island, UnitedHealthcare of New England and Neighborhood Health Plan of Rhode Island – are similar to those outside the exchange.
The primary selling points of HealthSource RI are a set of federal tax credits made available through exchanges for companies with fewer than 25 workers and a system allowing workers to pick their own plan. Some of these plans utilize nonconventional methods to achieve cost savings that Ferguson hopes will spread if popular. Kevin Lovett, a senior vice president at Gencorp Insurance Group in East Greenwich, said even if the website works, the potential for administrative problems under a new system with 16 different plans is causing most business to stick with what they’ve got, at least for now.
“The exchange is going to have limited appeal for employers except for the few who could get tax credits for having less than 25 employees,” Lovett said. “There is no price advantage directly, and it is administratively cumbersome having employees going on their own.”
Even outside of the exchanges, Affordable Care Act changes going into effect in January include other potentially confusing issues for employers, including making sure plans qualify for “gold,” silver,” “bronze,” and “platinum” designations. Plans must also be available at no more than 9.5 percent of a worker’s W-2 wage or else face an employer penalty in 2015, Lovett said.
As of press time, the state’s largest insurer, Blue Cross, has yet to release final rates for nonexchange plans, making it difficult for anyone to compare with the exchange plans.
While low exchange usage will provide a short-term political problem for HealthSource RI because of the expense of the system and its uncertain funding stream going forward, USI’s Slade said in the long term it might not be the worst thing for the system if it starts slowly.
Delivering a good experience for a smaller number of people and then building volume based on good word-of-mouth could ultimately work out better, he said.
Shedd at Taylor Box said his primary complaint with the coming health care reforms is the state’s 50-employee limit to be considered a small business, which he said is preventing him from hiring an additional 10 workers. That limit is supposed to rise to 100 workers in 2016 under federal law, but some states are considering doing it sooner.
Still, he expects the Rhode Island exchange to eventually be successful.
“When next year rolls around they will make adjustments in their offer and eventually everyone will be in the exchange,” he said. •

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