For almost five years, the Rhode Island Business Group on Health, a coalition of about 75 companies of all sizes, has been delving into health care and insurance issues, working to educate the business community and ensure it has a voice at the policy-making table.
Last year, when Blue Cross & Blue Shield of Rhode Island, UnitedHealthcare of New England and Tufts Health Plan all sought double-digit rate hikes, RIBGH played a key role in alerting businesses, seeking answers from insurers, and successfully opposing the hikes.
On Thursday, with a new set of hike requests on the table, RIBGH hosted a forum to explore the factors at play. Separately, the group sent a letter to Health Insurance Commissioner Christopher F. Koller, raising concerns about insurers’ choices and about the system itself.
J. Michael Vittoria, president of RIBGH and vice-president for human resources at Sperian Protection in Smithfield, answered questions about the group’s position.
PBN: How closely does RIBGH watch rate filings and participate in policy discussions?
VITTORIA: We’re a little different than your traditional Chamber of Commerce, for example. … Health care is our exclusive area of interest, but we define health care very broadly. We don’t just talk about rate filings – though we get very involved in the public-policy discussion. But we’re really looking at the whole concept of value-based purchasing by employers. We know we’re going to spend a lot of money on health care and insurance – that’s not going to change in the future – but what we’re concerned about is, when we’re spending all that money, what are we getting for it?
With the rate filings – yes, the cost is important, because of the impact it has on businesses and on the Rhode Island economic recovery. But we’re also looking at what’s driving these increases. It’s not just the typical soundbite, that evil insurance companies are making too much profit. We have to reform the payment system … how people access health care … and we’re looking at the cost shift from public plans onto private plans.
We have two of our members who sit on the insurance commissioner’s advisory council … and we’re very intimately involved with his office through the whole rate-filing process, because we have active representation on his council, which he has sought out. So when we do make a comment, it’s based on having a lot of firsthand knowledge of the system.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
Learn More
PBN: What do you think will happen if these rate hikes are approved?
VITTORIA: First of all, for a lot of our businesses, health insurance is one of the top three or five expenses. There are some businesses that pay more for insurance than for raw materials. And if you continually allow a significant cost to rise so much, what happens is, employers have to make some difficult decisions, and we’re seeing it already. Some say they can’t afford health insurance anymore; small businesses are often put in that position. Larger employers are likelier to find ways to shift more costs to their employees.
What happens is, people wind up leaving the insured market, because their employer no longer offers coverage, or because they can’t afford it.
Every time you add another 8 or 9 or 10 percent to the cost, that’s another $10 a week for somebody’s family coverage, another hour they have to work each week to afford health insurance, and more people drop out of the system. That’s what we’re seeing.
PBN: Your letter suggests insurers aren’t doing enough to hold down costs. What should they do better? Are there different issues with the different companies?
VITTORIA: There are different issues with different companies. They have different areas of focus. I think Blue Cross right now, for example, being the largest insurer in the state, we applaud their redesign and focus on primary care and chronic care initiatives; we think that’s extremely valuable. United has started to make a name for itself more in the consumer engagement and consumer-driven model, and we think that’s very beneficial. Tufts is relatively new to the market and fairly small, but they’re very highly rated in terms of performance in Massachusetts, and we’re very happy to have them in Rhode Island.
The difficulty we have, though, is that the insurance companies are also trying to work in a fee-for-service payment system that doesn’t work. They’re frustrated by it, we’re frustrated by it. If anything, where the system has broken down is, we need more discussion and more collaboration between the business community and the insurers.
That hasn’t happened as much as it needs to happen, and that’s what results in these negative reactions to rate filings. At RIBGH, we’re working to try to change that old dynamic. … We can’t all be in our own silos, pointing fingers at each other.
PBN: You raised the issue of cost-shifting. How big a concern is that for you?
VITTORIA: Cost-shifting is a huge issue. When you look at the public plans – I’ll use Blue Cross’ own numbers. Medicare pays about 87 cents on the dollar for the cost of a doctor’s visit. On the other side, the commercial market pays about 130 percent of the cost. So it’s a huge cost shift, and it’s a huge part of our premiums – covering the costs that are not being paid on the public side.
We have this kind of perverse incentive in the system that, no matter how hard the private market tries [to get workers to use health care services more wisely], we cannot overcome the massive cost-shift that’s coming our way.
Part of that is we have to restructure how we pay on the public side, too, because right now, the public-side fee-for-service system doesn’t work, and it just encourages these overcharges and the passing of costs on to the private side. That’s got to be part of the discussion. We can’t just work on it on the private side, without having the public sector engaged.
PBN: So what should Chris Koller do with these rate increase requests?
VITTORIA: He’s got the experts and the analytical capabilities to decide, but we recognize that … if the actual cost of the health care we’re using is going up 8 to 10 percent a year, that means you’re going to have to have some kind of premium increase.
Now ideally, we’d like to get the medical cost inflation down to where CPI is, which would be a lot lower, but that’s not the world in which we live. The objection that we have is not on that underlying trend, which we know part of that is our share. It’s looking at some of the broader issues, whether it’s administrative fees, contributions to reserves, profit – we think those are the kinds of things that in the short run, we’re going to have to put a lid on, and we’re going to have to figure out a different way of reforming the system. Because we can afford our share of the costs, but we can’t afford to bear additional costs beyond that.
Read the RIBGH letter on the proposed rate hikes on the group’s Web site.
