But subsidy based on premium tax defeated
Editor’s Note: This is an updated version of our print story.
After months of public hearings and back-room negotiations, legislators last week approved a package of health care reforms that will create a new, lower-cost benefit plan for small groups and individuals and give consumers access to information about the cost of their care.
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But a planned subsidy program included in the package won’t be able to get started until officials find a way to finance it, because the proposed system, based on a charge to insurers, was defeated.
The package also doesn’t include far broader “transparency” requirements that Health Insurance Commissioner Christopher F. Koller had sought – such as mandatory Internet posting of the prices of common procedures.
And efforts by business leaders and health insurers to cut back on the many benefits required by state law, or at least exempt the new low-cost plans, didn’t get anywhere.
Another effort to end Rhode Island’s requirement that insurers in the individual market take all comers, and instead create a high-risk pool, got a bit further – a bill was passed requiring Koller to study the feasibility of using federal subsidies to create such a pool.
As Sen. Elizabeth H. Roberts, D-Cranston, who co-chairs the Permanent Joint Legislative Committee on Health Care Oversight, sees it, the package is “another significant step forward” in the quest to make health care accessible and affordable to all Rhode Islanders.
“We recognize that the burden of health insurance costs is one of the most challenging issues for small businesses,” Roberts said. “This is another set of tools in the toolbox [for them], but we recognize there is a lot more to be done.”
Unlike Massachusetts, which this year approved a massive, comprehensive health insurance reform package, Rhode Island has taken small steps each year: overhauling the small-group market; requiring hospitals to report on the quality of their care; tightening oversight of Blue Cross & Blue Shield of Rhode Island, and creating Koller’s job.
This legislative session, Koller and Gov. Donald L. Carcieri proposed measures geared to making health insurance more affordable for individuals and small groups; making the confidential price agreements between insurers and providers public – so consumers and employers know how much it costs to get each service from each provider – and discouraging insurers from reaping big profits by penalizing them for “excess” margins.
Koller proposed a new type of health plan, “SelectCare,” for which his office would set the parameters, with the goal of providing coverage for as little as $329 per month without major deductibles – and with special subsidies for low-income individuals and employers with a large share of low-income workers. About 27,000 people could be covered under that plan, he said.
To help pay for the subsidies, Koller proposed a surcharge on “inefficient” health insurers’ profits – anything above 12 percent of total premium revenue – for an estimated $5 million to $10 million in annual revenue.
Separately, Lt. Gov. Charles J. Fogarty and key Democratic legislators, including Roberts, had proposed a program modeled on New York’s health insurance buying pool – also aimed at helping low-income individuals and small businesses.
To keep premiums low, that program would have covered a part of insurers’ losses, using money from a new health premium tax valued at up to $3 million per year.
Fogarty also proposed legislation to allow dependents up to age 25 who are part-time students, as well as older, disabled dependents, to be eligible for coverage under their family’s policy (full-time students are already eligible). That measure was also approved by the General Assembly.
The buying pool proposal and the SelectCare plan, on the other hand, were put aside after long debates and hearings, and a hybrid of the two is what passed.
It’s now called the “wellness health benefit plan” – to emphasize its focus on preventive care. Koller is still in charge of defining the parameters, aided by a committee of employers, health insurance brokers, chambers of commerce, and consumers who buy insurance directly.
The subsidy plan was approved, but the proposed means to pay for it – a twist on Koller’s “excess insurer profit-sharing” idea – was nixed after vigorous opposition from insurers.
Blue Cross spokeswoman Kim Keough said any surcharge would have entailed “cost-shifting” and would “drive up premiums for our members.”
Koller said he was “pleased” to see at least some progress made this year. “The affordable health plan is an important first step,” he said, adding that small businesses still need more help with health costs, so “we’re going to keep working on it.”
“If you’re trying to have affordable health insurance, you have to look at all aspects of the premium – profits, administration and medical costs,” he said.
Maureen Maigret, Fogarty’s policy director, said the lieutenant governor was “pleased” to see that several items on his agenda were coming to fruition, even if they had been modified.
On transparency, legislators approved a bill that doesn’t set hard-and-fast rules, but rather requires all parties to work together on a way to report health care prices. That’s the best approach to resolve such contentious issues, Roberts said.
“We have tried to have a very open door in terms of people voicing concerns,” she said, “and some of the legislation we’re passing will make the next six months a very active dialogue between all the parties involved.”
Read the official announcement of the passage of the Health Care Affordability Act of 2006 here (includes one-by-one descriptions of the bills in the package).
