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RI’s New Health Exchange: Five Crucial Questions

Monday, September 19, 2011

 

During the final days of its 2011 session, the General Assembly failed to pass legislation to create a Rhode Island health insurance benefits exchange – an online marketplace designed to enable uninsureds, insured individuals and small businesses to purchase plans.

A requirement of federal healthcare reform, if the state didn’t have the legal authority to operate an exchange by September 30, it stood to lose millions in federal funding. To fast-track the process to move an exchange forward, Governor Chafee signed an Executive Order today, but many questions remain that leave the exchange’s future in doubt.

Is the Executive Order Legal?

The first potential hurdle is whether this pending act by the Governor bypasses the authority of the General Assembly and will be challenged legally.

Even if it’s authorized on a state level, it’s unclear whether its constitutionality will be upheld. The exchanges are meant to support the federal healthcare reform mandate that everyone have insurance. In Rhode Island, that equates to about 140,000 uninsured residents. But 18 lawsuits throughout the country are challenging whether it’s constitutional to force people to purchase health insurance through a mandate, a decision, ultimately, for the United States Supreme Court.

Who Should the Exchange Serve?

The Rhode Island exchange will enable individuals to purchase insurance, with subsidies available for those who meet income eligibility guidelines. Since coverage, rather than cost-containment, is the primary goal of the Rhode Island exchange, it is up to the state to decide whether other populations, like small business, large employers, and even municipalities, will be allowed (or mandated) to take part.

In a September 8th letter to Lt. Governor Roberts, several employer organizations and representatives of the health insurance industry, including the Greater Providence Chamber, Northern Rhode Island Chamber, Rhode Island Hospitality & Tourism Association and all three insurance carriers, joined forces and suggested the exchange first concentrate on the immediate need – that of individuals and small businesses.

They wrote, “Accordingly, we believe the exchange should be focused on ensuring the requirements of the Affordable Care Act are met, specifically, that small employers and individuals have access to quality and affordable health care insurance choices and applicable subsidies.”

Will it Reduce Costs?

There’s no evidence to support that it will. And that’s echoed by Rhode Island’s consultant, Jon Kingsdale of the Wakely Consulting Group. Kingsdale was involved with start-up of the Massachusetts Commonwealth Connector, which hasn’t been able to slow costs, and doubts an exchange in Rhode Island can either.

Will the Exchange be Viable Long-Term?

The millions in establishment funds Rhode Island expects to receive do not guarantee the exchange’s future. To raise revenue that will sustain the exchange long-term, it will need to charge fees. Without these dollars, the insurance carriers would be forced to pass a tax through the premium, which employers and employees who are already insured, will have to pay. And if the exchange doesn’t attract enough interest to cover its operating costs, taxpayers will end up subsidizing the bill, like they’re doing in Massachusetts.

Who Will Run It?

After issuing the Executive Order, the Governor appointed the public members of the Exchange Board – who will join the Director of Administration, the Secretary of the Office of Health and Human Services, the Health Insurance commissioner and the Director of Health – and named former U.S. Attorney Margaret “Meg” Curran as chair.

But it’s unclear how the Board can recommend design and policy decisions with Curran leading the charge. Known primarily as the key prosecutor in Operation Plunderdome, she has no background in healthcare or its economics, unlike her peers in two other states. Jay Gonzalez, Chairman of the Massachusetts Commonwealth Connector, has an extensive background in public finance and capital projects and serves as Secretary for Administration and Finance for the state. The Utah Exchange, contrasted to RI, is housed in UTAH’s Department of Economic Development.  It is directed by Patricia Conner who comes from the private insurance industry sector.

And in typical Rhode Island fashion, there is union membership on the Board, even though the exchange is designed to serve individuals, uninsureds and small businesses, groups largely not represented by unions. The Board would have been better served by someone with group insurance purchasing savvy who could help position the exchange for long-term sustainability. 

Confusion persists over the implementation of an exchange here, who it will serve and whether it can deliver on its promises. Rhode Island needs details soon, or it won’t just be dollars we’ll lose.

Amy Gallagher has over 19 years of healthcare industry experience. At Cornerstone Group, she advises large group employers throughout southern New England on long-term cost-containment strategies, often coupling consumer-driven products with results-driven wellness programs. Amy speaks regularly in the business community on a variety of healthcare-related topics. She is a member of the Rhode Island Business Group on Health, its broker advisory subcommittee, HRM-RI, the Society of Human Resource Management (SHRM), WELCOA,  and the Rhode Island Business Healthcare Advisory Council (RIBHAC) where she is Co-Chair of Media Relations. Amy participates in Lieutenant Governor Roberts’ Health Benefits Exchange work group of the Health Care Reform Commission.

 

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