Rhode Island's Governor Carcieri has proposed to create a new, affordable health plan for small businesses (up to 50 employees) and individuals, with additional subsidies for businesses with mostly low-wage workers. As a condition of doing business with the state, all insurers would be required to offer a SelectCare insurance product. The product would be affordable not by cost-shifting to members (e.g., through higher copayments and deductibles or reduced benefits), but rather by addressing underlying medical costs through appropriate incentives for employers, consumers, and providers using the following principles:
- focus on primary care, prevention, and wellness;
- protect members from the costs of catastrophic illness;
- encourage use of least-cost, most appropriate settings;
- use evidence-based, quality care; and
- actively manage the chronically ill.
Under the SelectCare Market Incentive, employers in small businesses with mostly low-wage workers (as determined by data from the Department of Labor and Training) and individuals deemed to be high risk because of their health conditions, even if they are not working, could purchase a SelectCare product that covers medical expenses up to a certain dollar level. The state would pay for claims above that level to a cap, limiting the insurer's risk and thereby keeping premiums more affordable. The state would finance this insurer risk-sharing arrangement through the expected $5 to $7 million in annual interest to be earned on a new Trust for Rhode Island Health Insurance, seeded with $100 million from a securitized tobacco settlement.[2] An additional $5 to $10 million would come from a new surcharge on health insurers for excess profit and administrative costs. Together with the benefit of state bargaining on their behalf, the SelectCare Market Incentive is projected to save small firms about 20 percent on health insurance costs compared with current small business market rates. About one-fourth of the SelectCare participants are expected to benefit from the subsidy program.
Another component of the proposal is to promote transparency by giving consumers greater access to information about the cost of common procedures. The details of the proposal, such as how to structure financial incentives to providers to promote primary care, would be refined after stakeholders have the opportunity to offer input. This legislation has been introduced in Rhode Island's House (H7466) and Senate (S2614), along with several other bills to promote health insurance among small businesses. Action to improve the small group health insurance market is expected shortly.
"Clearly, states have to help make the small group market work: by using their leverage the way large purchasers do to help develop products and health plan competition that get at the underlying cost drivers—not just shift costs around; by employing targeted assistance to keep low-wage businesses from throwing in the towel when it comes to health insurance; and making sure consumers have reliable pricing information when they make treatment decisions," says Chris Koller, Rhode Island's health insurance commissioner.
References
[1] Small businesses will still be subject to modified community rating.
[2] Proceeds from the sale of bonds backed by payments that tobacco companies will make in the future.
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