Rhode Island’s myriad small businesses frustrated by the high cost of providing health insurance to their employees could have an affordable, high-quality alternative as soon as next spring. That’s when the Department of Human Services hopes to make available a state-purchased insurance program that small businesses and individuals will be able to buy into, according to DHS Director Christine C. Ferguson.
The program — for which about 95 percent of Rhode Island businesses would be eligible — will build on the success of the state’s four-year-old RIte Care program financed by the state and federal governments. RIte Care enrolls women and children formerly covered by Medicaid, as well as a population of low-income people who were previously uninsured, in a choice of four HMOs that have contracted with the state: Neighborhood Plan of Rhode Island, Harvard Pilgrim Health Care of New England, United Healthcare of New England and Blue CHiP.
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In the case of RIte Care, the state pays each insurer a fixed amount per enrollee in return for health care according to the state’s requirements, Ferguson said. The expanded program would work the same-way but could include even more choices in terms of plan names and managed-care products, she said.
Ferguson is expecting the state-purchased program to be popular among small business owners. She said her staff has been fielding inquiries since early last month when Gov. Lincoln Almond made a general announcement about it in conjunction with an effort to expand RIte Care.
“We are still to this day receiving a fair amount of calls from individuals and businesses who want to know when they can purchase this,” Ferguson said. “We were all taken aback by the volume and the length of time from the announcement that the calls kept being made.”
Details of the program are nonexistent, as it is still in the planning stage. However, RIte Care’s success is a good indication of things to come, Ferguson said.
For one thing, RIte Care has shown that a state-purchased insurance program can work, she said. RIte Care critics initially said that poor people would be more expensive to insure than other populations. But a recent DHS study showed that once they had access to primary care, the 75,000 Rite Care subscribers acted like anyone else, avoiding unnecessary trips to the emergency room, getting prenatal care and immunizing their children, she said.
What’s more, the program proved that a large purchaser representing tens of thousands of subscribers can be more effective than the regulatory route in changing the way health care is delivered, Ferguson said. “It’s not only bargaining power in terms of price. It’s also bargaining power in terms of contract language.”
Ferguson expects to hear from private group insurers of small businesses who might fear the state cutting in on their business.
“One of the things that we are looking into is the whole crowd-out issue,” Ferguson said. “But I think that the primary objective has to always be kept in mind, and this is what most of us lose sight of when we get mired in the details. We want to ensure that the health of our folks in Rhode Island is at the best possible level ever and that we are paying a fair price for the services that are necessary to achieve that goal.”
So far, there appears to be little concern.
Dr. Michael J. Follick, president and chief executive officer of The Abacus Group in Cranston, said he isn’t worried that his clients — groups of small businesses pooling together for purchasing power — will jump ship for a state-purchased plan.
“Our purchasing cooperative has a somewhat different agenda and attracts a somewhat different market,” Follick said. ” The employers in our cooperative have more of an involvement. They have a board that represents their interests.”
Anne Bates, president of the East Bay Chamber of Commerce, said she isn’t sure how the state program will affect a similar one available to small businesses through 12 local chambers of commerce.
The program “is more of a service” than a money maker for the chambers, Bates said, “But I would hope that we can continue to provide it.”
At the same time, “it’s good to see everyone working to lower the costs of business,” she said.
Rates are the crucial unknown factor in the state program and they are mostly driven by numbers, Bates said. At the same time, she guessed that insurance companies will look more favorably on groups of small businesses rather than a blend of employed and unemployed people. People in business are “less apt to get sick than other people because they can’t afford to get sick. The usage is lower than other groups tend to be,” she said.
Meanwhile, Ferguson said her department is putting together a survey to find out what small businesses want from a state-run program. Anyone interested in participating can call 1-800-346-1004 (or 1-800-299-8444 in Spanish) for information.
