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New Competition for HealthSource RI Emerges

Tuesday, February 04, 2014

 

UnitedHealthcare – an Obamacare opponent that once eschewed private exchanges – recently shocked a crowd of business owners with plans to open a private exchange for businesses and their employees in Rhode Island. This met immediate criticism from Christine Ferguson, executive director of HealthSource RI, who said UnitedHealthcare’s exchange would limit options.

“There is an exchange that deals with individuals; those individuals get tax credits because they do not have access to affordable, employer-based coverage. The other is a small business exchange. You can choose Blue Cross, Neighborhood and United – and next year, Tufts,” she said.

“With United, the only option given to employer [and employees] is within United. So, any ability that we now have to use competition by allowing consumers to choose goes out the window.”

UnitedHealthcare of New England President and CEO Stephen Farrell dropped the news at the Health Insurance Small Employer Taskforce meeting on Jan. 28. The meeting included a panel discussion with Farrell, Mike Hudson, chief operating officer at Blue Cross & Blue Shield of Rhode Island, Brenda Whittle, vice president of Neighborhood Health Plan of Rhode Island, and Thomas Croswell, president and COO of Tufts Health Plan – executives from the health insurers that offer commercial health plans in Rhode Island.

New contract for state employees

The Chafee administration recently signed a new contract for current and retired state employees with UnitedHealthcare. The contract runs from Jan. 1, 2014, through Dec. 31, 2016. The state can renew it for up to two more years. The cost of the new contract is unknown because the state is self-insured. The contract only covers medical treatment. A separate agreement for prescriptions is being negotiated CVS Caremark.

Richard Asinof broke the exchange story on his online weekly newsletter, ConvergenceRI. Asinof, who was at the meeting, is a journalist who most recently was the health care and life sciences contributing writer for Providence Business News.

“UnitedHealthcare’s decision to open its own private exchange is in direct competition to Rhode Island’s exchange. As Christine Ferguson, HealthSourceRI’s executive director, said, it is all about the for-profit health insurer’s efforts to increase market share,” Asinof said.

“At issue is not the state of Rhode Island’s recent contract with state employees and retirees. What is at issue is how the state – and the R.I. General Assembly – will choose to provide future financial support for HealthSourceRI.”

Asinof believes UnitedHealthcare’s decision to open its own private exchange provides the illusion of consumer choice – employers and employees can choose between different UnitedHealthcare products, but not from other insurance plans in the marketplace.

“UnitedHealthcare is the biggest health insurer and has made a business decision not to go into the exchanges because they see more profits in skimming off the best risks,” said Robert McGarrah, AFL-CIO Office of Investment Counsel and healthcare benefit expert in Washington, DC.

“They, together with their for-profit competitors, were the biggest opponents of Obamacare, secretly sending over $100 million to the US Chamber of Commerce and Tea Party opponents. Why? Because they didn't like the ‘public option’ that was soon eliminated in a deal with Obama.”

Surprising announcement

In that regard, Farrell’s announcement was a big surprise. Just before the consumer marketplace for insurance went live last year, the Wall Street Journal (WSJ) wrote that big insurers such as UnitedHealthcare would avoid exchanges.

“The insurance companies that are likely to draw attention on the exchanges— which are expected to enroll an estimated 7 million Americans in the first year—are lesser- known, and in many cases will be offering comparatively lower rates. The biggest health insurers are eschewing many of the exchanges out of concern that many of the individuals who will purchase coverage need it because they have chronic illnesses or other medical conditions that are expensive to treat,” write the WSJ.

Under the Affordable Care Act – often referred to as “Obamacare” – companies with 50 or more workers are required to offer affordable health coverage or pay a penalty. Some companies are choosing to offer their employees health benefits via private exchanges — online insurance marketplaces that are separate from the federal system.

“We have always maintained that this one-size-fits-all approach – a heavily-mandated approach – cannot possibly deliver the diversity and range of products that individuals and businesses are looking for,” said Mike Stenhouse, CEO of the Rhode Island Center for Freedom.

“You have to allow open competition. You have to allow businesses to determine which product best meets their needs.”

Asinof said the competition in the Rhode Island health insurance market is for small business customers.

“HealthSourceRI has launched ‘full employee choice,’ targeted at small businesses, as a way to introduce competition and consumer choice in the market to lower costs,” Asinof said.

Still, Stenhouse was perplexed by complaints from Ferguson and the push back from the business community.

“I don’t think they’re seeing the big picture. Business owners have been drinking the Kool Aid to think that only government knows how to put together low cost products.

Let’s have the competition. Let’s see what happens.”

Messages to UnitedHealthcare seeking comment were not immediately returned.

 

Related Slideshow: New England’s Healthiest States 2013

The United Health Foundation recently released its 2013 annual reoprt: America's Health Rankings, which provides a comparative state by state analysis of several health measures to provide a comprehensive perspective of our nation's health issues. See how the New England states rank in the slides below.

 

Definitions

All Outcomes Rank: Outcomes represent what has already occurred, either through death, disease or missed days due to illness. In America's Health Rankings, outcomes include prevalence of diabetes, number of poor mental or physical health days in last 30 days, health disparity, infant mortality rate, cardiovascular death rate, cancer death rate and premature death. Outcomes account for 25% of the final ranking.

Determinants Rank: Determinants represent those actions that can affect the future health of the population. For clarity, determinants are divided into four groups: Behaviors, Community and Environment, Public and Health Policies, and Clinical Care. These four groups of measures influence the health outcomes of the population in a state, and improving these inputs will improve outcomes over time. Most measures are actually a combination of activities in all four groups. 

Diabetes Rank: Based on percent of adults who responded yes to the question "Have you ever been told by a doctor that you have diabetes?" Does not include pre-diabetes or diabetes during pregnancy.

Smoking Rank: Based on percentage of adults who are current smokers (self-report smoking at least 100 cigarettes in their lifetime and currently smoke).

Obesity Rank: Based on percentage of adults who are obese, with a body mass index (BMI) of 30.0 or higher.

Source: http://www.americashealthrankings.org/

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6. Rhode Island

Overall Rank: 19

Outcomes Rank: 30

Determinants Rank: 13

Diabetes Rank: 26

Smoking Rank: 14

Obesity Rank: 13

 

Strengths:

1. Low prevalence of obesity

2. High immunization coverage among adolescents

3. Ready availability of primary care physicians  

Challenges:

1.High rate of drug deaths

2. High rate of preventable hospitalizations

3. Large disparity in heath status by educational attainment

Source: http://www.americashealthrankings.org/RI

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5. Maine

Overall Rank: 16

Outcomes Rank: 25

Determinants Rank: 12

Diabetes Rank: 23

Smoking Rank: 29

Obesity Rank: 28

 

Strengths:

1. Low violent crime rate

2. Low percentage of uninsured population

3. Low prevalence of low birthweight  

Challenges:

1. High prevalence of binge drinking

2.High rate of cancer deaths

3. Limited availability of dentists

Source: http://www.americashealthrankings.org/ME

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4. Connecticut

Overall Rank: 7

Outcomes Rank: 15

Determinants Rank: 4

Diabetes Rank: 16

Smoking Rank: 4

Obesity Rank: 12

 

Strengths:

1. Low prevalence of smoking

2. Low incidence of infectious diseases

3. High immunization coverage among children & adolescents  

Challenges:

1. Moderate prevalence of binge drinking

2. Low high school graduation rate

3. Large disparity in health status by educational attainment

Source: http://www.americashealthrankings.org/CT

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3. New Hampshire

Overall Rank: 5

Outcomes Rank: 7

Determinants Rank: 5

Diabetes Rank: 16

Smoking Rank: 11

Obesity Rank: 22

 

Strengths:

1. Low percentage of children in poverty

2. High immunization coverage among children

3. Low infant mortality rate  

Challenges:

1. High prevalence of binge drinking

2.High incidence of pertussis infections

3. Low per capita public health funding

Source: http://www.americashealthrankings.org/NH

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2. Massachusetts

Overall Rank: 4

Outcomes Rank: 14

Determinants Rank: 3

Diabetes Rank: 10

Smoking Rank: 7

Obesity Rank: 2

 

Strengths:

1. Low prevalence of obesity

2. Low percentage of uninsured population

3. Ready availability of primary care physicians & dentists  

Challenges:

1. High prevalence of binge drinking

2. High rate of preventable hospitalizations

3. Large disparity in health status by educational attainment

Source: http://www.americashealthrankings.org/MA

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1. Vermont

Overall Rank: 2

Outcomes Rank: 12

Determinants Rank: 1

Diabetes Rank: 4

Smoking Rank: 9

Obesity Rank: 5

 

Strengths:

1. High rate of high school graduation

2. Low violent crime rate

3. Low percentage of uninsured population  

Challenges:

1. High prevalence of binge drinking

2. Low immunization coverage among children

3. High incidence of pertussis infections

Source: http://www.americashealthrankings.org/VT

 
 

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Comments:

Awesome news from United Healthcare! Of course, Ferguson doesn't like competition... BRING IT ON!

Comment #1 by Diane Fitzgibbons on 2014 02 04

Rhode Island's new Obamacare-mandated online health insurance marketplace, which launched Oct.1, has proposed nearly $26 million in spending for the budget year that starts July 1, 2014.

Per golocal-prov.com " And according to Christine Ferguson’s testimony before state legislators, an expected 70,000-100,000 Rhode Islanders will enroll this year. So $26 million for 100,000 projected enrollees equals a per enrollee cost of $260! And that assumes the highest enrollment projection- if only 70,000 use the RI Exchange then the per enrollee cost is $371! That essentially increases the cost of health insurance in RI for those who use the exchange or for taxpayers, generally.

By comparison it appears that here is no cost to RI (either to enrollees who use the exchange or to taxpayers if paid via an appropriation from the General Fund) if the federal exchange is used instead of a RI specific exchange? i think its zero, but not certain.

RI simply does not have the scale to make a RI exchange worthwhile from a cost perspective. Why are we doing this?

ERISA exempts employers who "self-fund" from all state insurance regulation. Any state law attempting to regulate/charge fees for the RI Exchange (or anything really) to self insured entities will fail as a matter of well established interpretations of ERISA. So the costs of the RI state exchange will either be borne by the users when they purchase an insured product (via an assessment-built in fee) or by the taxpayers of the state (via tax revenues from the General Fund) as a whole.


If I am a state legislator, why do I want to increase state taxes by $26 million for this?

All the above assumes Obamacare survives.

While there have been many computer/program issues with the roll out of the federal exchange, it seems that these issues are likely to be resolved overtime.

Why do we have to have a RI specific health exchange? Answer: Egos, jobs, patronage.

The funding of a RI health exchange only further serves to add unnecessary costs to health insurance coverage- costs borne by employers and covered individuals and state taxpayers. Another small step making RI less economically competitive!

Comment #2 by Donald Williams on 2014 02 04

Why should anyone squawk about the introduction of competition? I'd like to think that we still live in a free market society, to the betterment of all. Like it or not, United has every right to enter the marketplace on their own. Can't do anything but help potential subscribers. The only ones that should worry are the overpaid bureaucrats at HealthSource.

Comment #3 by Joseph Reynolds on 2014 02 04

GOOD FOR YOU UHC! I WOULD RATHER DEAL WITH YOU THAN ANY GOVERNMENT PROGRAM..I'M SURE DOCTORS WOULD TOO.

Comment #4 by JOJO MONKEY on 2014 02 04




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