It was one of R.I. Health Insurance Commissioner Christopher F. Koller’s most ambitious initiatives, almost two years in the making, designed to not only make small-group health insurance more affordable, but help hold down costs in the long run.
The HealthPact plans – unveiled last summer by Koller and his R.I. Office of the Health Insurance Commissioner and offered as of Oct. 1 by both Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England – took an approach to keeping premiums low that had never been tried before in this market.
Instead of imposing high deductibles and co-payments on subscribers – the most common tactic in use today – or limiting access to services or the allowable providers (the HMO approach), HealthPact offered relatively comprehensive coverage with relatively low out-of-pocket costs in exchange for a personal commitment.
If you agreed to undergo a health-risk assessment, chose a primary care doctor, and made a good-faith attempt to lose weight, quit smoking, or otherwise improve your health, with the insurer’s help and support, you got a pretty good health plan at a fairly low price.
If you didn’t make this commitment, you got what a premium like that would normally buy you: a very high-deductible plan ($5,000 for an individual, vs. $750 for “advantage” members) with loads of out-of-pocket costs.
With average individual premiums in the low $300s, HealthPact plans are among the cheapest options available to small groups – with 50 or fewer members – in Rhode Island today.
On one recent United quote, for example, the HealthPact option was about 50-percent cheaper than a preferred-provider (PPO) plan with a $350 deductible and the low out-of-pocket costs that are typical here ($10 per office visit, no coinsurance for in-network services), and slightly cheaper than a $1,000-deductible plan with 20-percent coinsurance, or a $2,000-deductible plan with no coinsurance. Only plans eligible for health savings accounts were cheaper, but they carry deductibles of $1,500 and more, with first-dollar coverage only for preventive care.
So based on price alone, one might expect, HealthPact plans should have done well, especially given how overwhelmed small-business owners say they are by the cost of health insurance.
And Koller’s office, business leaders, some insurance brokers and the insurers themselves all promoted HealthPact heavily, holding multiple educational events to help spread the word about this innovative, lower-cost option.
But employers didn’t buy it. As of Nov. 30, only 89 groups with 286 members – less than 1 percent of the small-group market – had enrolled in HealthPact plans, according to Matthew Stark, principal policy associate in Koller’s office and the point person for HealthPact.
“I would say we’re a little disappointed,” said Don Croisetiere, vice president for small business at United, adding that as of this month, the insurer had about 15 or 16 groups with 75 to 80 members enrolled in HealthPact plans.
“The performance is probably not at strong as what the commissioner had hoped for,” Croisetiere said. “It’s clearly a different type of product,” he noted, and although United has allocated “significant resources” to supporting it, “there’s still some resistance from brokers and also from clients.”
Croisetiere said HealthPact is a “reasonably competitive” kind of plan, but the fact that it comes with personal responsibilities attached – both what people have to do to qualify for the “advantage” package, and the reporting involved – has created “some anxiety” among employers and brokers alike.
“If you’re a healthy population, it’s really a very good decision or an easy decision,” he said. “If you have issues within the group where folks might not commit to smoking cessation programs or going to a physician on a regular basis, it could be problematic.”
There are also other choices, Croisetiere noted, including plans already offered by United, that may seem less challenging and complex but address the same concerns. “The thing you have to keep in mind,” he said, “is this is just another option for employers.”
At Blue Cross, where spokeswoman Kim Keough said there were 124 groups with 245 members enrolled in HealthPact as of Nov. 30 – more recent figures were not available – the word on the new plans is a bit more positive; the explanation for the low enrollment numbers so far is primarily that it’s a new product, and new products take time to catch on.
But Joel Cooper, executive vice president of USI New England, a major brokerage, said there are “a number of problems” with HealthPact that make it inherently hard to sell. “I think it’s the right thought; it’s the right intent, but it needs a lot of changing to make it work,” he said.
Cooper is a Blue Cross veteran widely regarded as an expert in health insurance. He has designed programs with personal-responsibility components through USI and said the main problem with HealthPact is that it’s too complex. The only way it can be manageable for an employer is with “a lot of hand-holding and a lot of hands-on work” by a broker, he said.
And because brokers get paid very little per HealthPact subscriber, Cooper said, it’s just not feasible for them. As a result, the plans lack a strong distribution network, he said, and that is a major problem. (Amy Gallagher of rival Cornerstone Group, which hosted multiple events to promote the HealthPact plans, declined to comment for this article.)
Stark, in the commissioner’s office, said he’s spoken at length with the insurers, with brokers and with employers to gauge the response to HealthPact, and he’s aware of the concerns. But like Blue Cross officials, he said it’s primarily a matter of time.
For starters, there were problems with the rollout, he said: People who didn’t properly complete the health-risk assessments and pledges required for HealthPact were being automatically put in the “basic” plan with the $5,000 deductible, for example, so Koller’s office intervened and now people are given a chance to correct mistakes, so they only get put in “basic” if they genuinely refuse to meet the HealthPact requirements.
And having the right broker is key, Stark said; not all can handle HealthPact. But most of all, the challenge is that HealthPact represents a “culture shift,” he noted, in that individuals and employers are being asked to do their part to control the rise in health care spending.
“Do they chafe at this? Yes, perhaps especially in Rhode Island, where we have traditionally enjoyed a rich, arguably unrestricted benefit,” he said.
Yet if we don’t embrace the principles built into HealthPact, of primary care, prevention, disease management and so forth, Stark argued, costs will keep rising unsustainably. Moreover, he said, even now, the alternatives aren’t good: higher premiums, higher deductibles or reduced coverage.
HealthPact “is certainly in its infancy,” he said. “We are behind HealthPact for the long haul.” •
