After months of public and behind-the-scenes discussions, Gov. Donald L. Carcieri and Health Insurance Commissioner Christopher F. Koller last week formally introduced the health plan created by the R.I. General Assembly’s Health Care Affordability Act of 2006.
The plan – designed to make basic health coverage more affordable for businesses with fewer than 50 employees, and for individuals – now has been presented to the state’s major insurers: Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England. And the insurers have been charged with delivering, by Jan. 2, the details of how they will comply with its mandates.
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The most visible components of the plan are its premiums, starting at $314 for an individual.
The $314 figure represents 10 percent of the average wage in Rhode Island. It was picked as the target premium in large part because small businesses don’t have the negotiating power to help contain rising costs. Medical costs are rising 10 to 13 percent every year, Koller observed, and health insurance premiums are keeping pace, but income is not.
“Small businesses don’t get to go to the table and negotiate with insurance companies. This plan gives us a voice at the table,” said Donald Nokes, president of NetCenergy, a small network-server support business in Warwick, whose employees would benefit from the WellCare plan.
“We have to give our employees health insurance,” Nokes said. “It is the right thing to do, and it’s the way to retain good employees. But we’ve had to shift more and more of the costs to employees because each year, the premiums increase.”
About 65 percent of businesses with fewer than 10 employees offer health insurance coverage, compared with 98 percent of employers with more than 50 employees, reports the Office of the Health Insurance Commissioner, in the R.I. Department of Business Regulation.
And like Nokes, the small employers who do offer insurance often opt for plans with high deductibles, to reduce the cost of their premiums. But many of their employees can’t afford those higher deductibles, so more and more working Rhode Islanders are dropping health insurance.
In response, the state has crafted the WellCare program; the enabling law requires that the new health insurance plan be available to small businesses and direct-pay customers by May 2007.
Details of the plan were drafted by the WellCare Advisory Committee, made up of small business and labor union representatives, health insurance brokers, insurance subscribers and consumer advocates. The WCAC convened in September, under legislative direction, and held biweekly public meetings.
In designing the plan, the panel built in a number of levers by which WellCare can hold down costs, and thus, premiums. Interestingly, they go beyond high deductibles and out-of-pocket expenses.
Under the WellCare plan, insurers will reward proactive health measures with lower premiums.
For instance, WellCare expects participants to “pledge” their participation in a wellness program and eventually, to prove their participation. Overweight individuals would be expected to participate in weight-management programs, at the insurer’s cost; smokers, expected to pledge to kick the habit and to take part in smoking-cessation programs.
Disease and case management programs would be covered, in some circumstances, and premiums would be lower for people who see their primary care physician and complete health risk appraisals.
Those who take part in a wellness program would face a $500 deductible and a $3,000 maximum out-of-pocket expense. For those who opt out, the result would be a $3,000 deductible and $6,000 in out-of-pocket expenses.
“The plan puts some of the responsibility back on the person,” Carcieri said. “We are getting to the root of the problem.”
The plan also would attempt to reduce health care costs by the use of tiered provider networks. Subscribers would be encouraged to use doctors who are known for high-quality, cost-effective care.
“The proposal we established requires everyone involved to work together,” Koller said. “Providers need to embrace standards of care; insurers need to invest in value-added services for smaller employer groups; and employees have financial incentives to commit to healthier choices.”
While the concept has received a thumbs-up from many in the community, however, the insurers say they are not sure how it can work.
“Blue Cross supports the effort to create a more-affordable health plan, and will continue to work [toward that goal],” said Kim Keough, assistant vice president for public relations at the state’s dominant health insurer.
Still, she said, from Blue Cross’ perspective, there are two main sticking points.
The first is the $314 monthly premium, which is “actuarially insufficient,” Keough said. She noted that the figure was not arrived at not by the marketplace, but by the legislature.
Koller “is aware of our concerns,” she said. “… We are trying to tweak things, to maybe change some of the requirements” and make the numbers work.
The second issue, she said, is the mandated use of care providers who are proven to have high-quality and cost-effective operations.
“We feel there is insufficient quality data in Rhode Island” to create a network of such providers; in fact, she said, there is not enough data anywhere. “There isn’t really a standard set up on how to rate quality in physicians.”
But Keough said she is confident that the sticking points will be worked out and workable plans will be presented in the New Year.
She is not alone in that expectation. Carcieri said he is “optimistic” that insurers will respond well to the plan, because “it is the right thing to do.”
