HealthSourceRI — A Year Later

A year ago, we wrote about the massive changes happening in health care – Obamacare on the national level, HealthSourceRI and changes at Blue Cross Blue Shield and other RI institutions, as well as how those things were expected to change the lives of local residents, especially artists, musicians and others in professions that historically often slipped through the cracks in the healthcare systems.

At the time, the federal program was a hot, steaming mess – the bazillion dollar website they’d created didn’t work yet. Rhode Island had opted out of the federal website, creating its own (not inexpensive) site and system to fulfill the requirements of Obamacare (as did a small number of other states). At the time, the RI site worked pretty well, but all you heard about in the news and on social media was how badly the federal exchange was going down in flames. The messages were a bit confusing, and a lot of people shied away entirely.

So, where have we come from there? Healthcare will never be an easy thing to fix, and insurance will always be complicated, but we checked in with sources at HealthSourceRI, BlueCross/BlueShield, our new governor’s office, and the Tune In & Tune Up program at the RI Music Hall of Fame to find out what’s changed since last year, and what they think lies ahead.

How Does This Thing Work?

First, the very, very short version of how healthcare has changed and how a health exchange works: Most Americans get health insurance through an employer – for small businesses and the self-employed, unemployed or creatively employed, options used to be scarce and expensive. Obamacare required each state to adopt a system that would comprehensively present options for individuals and for businesses of all sizes (businesses still have the option to control their offerings through their HR departments). This system, a kind of digital marketplace, is called an exchange. We health consumers use the exchange to compare plans side by side, get information, and ultimately  sign up for a form of insurance. The exchange itself does not insure – it aggregates available insurers and acts as a gateway. You will pay through the exchange, but you are still becoming a customer of Blue Cross, Neighborhood Health Plan, Medicare or Medicaid (and perhaps more in the future).

If you’re a business, you can sign up through the exchange and even offer what’s called “employee choice,” where employees can select the plan that works best for them, through the exchange, from among the options and payment scenarios you’ve approved.

The Good

How much you pay depends on a few simple demographics and your income. You no longer have to worry about pre-existing conditions, your gender, your history, your Midi-chlorian levels or any of the elements that used to make the process and pricing so exceedingly opaque. We’re not saying it’s EASY now. But it’s possible to compare prices – apples to apples – which was nearly impossible before. So that’s some major progress.

RI has an exchange that goes the extra mile – at least for now – compared with those used by most other states. It has a lot of information in there. There is ample phone support. There are walk-in centers that will help explain options to you in person (definitely not required by the federal statute, but well received by those who’ve gone to them).

The pricing takes your income into effect. If you earn less than $15,800, you qualify for free health insurance. It’s a sliding scale from there – which should leave most people no financial argument against getting coverage. Now in terms of economic theory, we can argue about whether this belongs in the good column or the bad column – but if you couldn’t afford healthcare before, as was true for many in entertainment and the arts, it’s a pretty good change.

The Bad

There WILL start to be fines on your taxes if don’t get some sort of health insurance. Those were waived last year because of the problems with the technology behind the federal exchange, which slowed a lot of things down, but this year they’re for real. The open enrollment period, during which you need to register to avoid the fine this year, ends Feb 15.

In the big picture, there are some concerns ahead. Federal support for local exchanges is going to go away. Obamacare basically paid for a lot of what RI built – it’s going to be up to the state to maintain it. There’s still a lot of mystery to when and at what speed the funding will go away, but somewhere along the way RI will need to figure out how to pay for the exchange. More on this in a minute.

The other sticky point is that an exchange that provides better access to health insurance and makes it more widely accessible doesn’t directly address the costs of healthcare. Those keep going up, and ultimately are being paid by all of us, in a combination of direct and indirect ways. The healthcare industry is a runaway juggernaut of costs and bureaucracy. Healthcare employs 1 out of 6 Americans. Its political lobbying spending, when combined, dwarfs even the old military-industrial complex (although health insurance, care providers, big pharma and various health-related unions are often at odds in their lobbying efforts). And it’s the only industry where advancing technology is actually raising costs, by adding to options and capabilities more than efficiency. None of these factors make reducing costs or improving efficiency very likely. Healthcare is still broken at a fundamental level. My inner punster wants to call Obamacare a Band-aid. It’s more than that. But it’s not a cure.

The ways in which we will pay for the broader coverage Obamacare makes possible will be emerging in the next few years – it’s very likely some of it will be covered through the larger employers and their co-paying employees. Some local companies are already raising co-pays and budgets to prepare for pending “Cadillac tax” ramifications – basically, a surcharge in federal taxes for companies whose health benefit plans are above average. If they offer their employees too good a deal, they need to pay the government more for it. (This is a fascinating reversal from the origins of employer-provided health insurance, which started as a way around federal limits on salary increases. You can find more about that online in last year’s health issue – motifri.com/aka.)

What’s different about Rhode Island?

As the first colony to declare independence and the last state to ratify the new constitution in 1790 (under threat of being invaded as a “foreign power”), RI has a long-reaching history of independent thinking and, perhaps, contrariness. So it’s really no surprise that in some ways, our state responded to Obamacare like few others.

First, we made our own exchange. That’s a legit option under Obamacare, and we weren’t the only ones. But remarkably, we finished it successfully and it works, technologically speaking, pretty well. Motif experimenters still found some glitches (particularly during open enrollment last year – see The Hummel Report at motifri.com/HealthSourceri-enrollment-problems), but there’s responsive phone support to help – definitely a rarity in RI tech, and there’s been improvement over last year. If you’ve ever tried to navigate RI’s DMV or unemployment claims systems, you may find it hard to believe that any state-helmed system could actually work without inspiring you to throw your pc/laptop/phone at the nearest smashable object. But while the federal system was inspiring that kind of reaction, the RI exchange was relatively working.

Another significant difference is that RI is the only state that chose not to auto-renew subscribers, but rather ask them to manually renew. Pretty much everyone approaching the issue from a strictly financial perspective hears that and says, “Why the hell would you do that?” So we asked HealthSourceRI.

“It’s a matter of faith in our consumers,” says Wallack, who bristles at the quote by healthcare consultant Jonathan Gruber, who supports Obamacare but claimed its passage was a “very clever basic exploitation of the lack of economic understanding of the American voter,” when speaking at URI a few years ago. He’s also known, now, for comments in which he called the American voter, “stupid.” HealthSourceRI feels their success depends on the average RI consumer being, well, not stupid.

“Informed consumers help the whole process,” Wallack says. They contribute toward finding flaws in the system and their informed choices will make insurers come up with the best possible products. It’s an idealistic view from a capitalist perspective – make the playing field fair and make sure the consumer is well-informed, and the market will reward consumers with better products. And HealthSourceRI has made it part of their mission to do more education, more outreach and seminars, and to create clearer digital communications than any other exchange.

Does this mean we could end up with some of the most informed healthcare consumers in the country? It is, after all, a country where most of us have frankly gotten used to accepting insurance described in enormous packets we never read, unless we find ourselves in sudden and dire need of understanding their intricacies. So the bar is starting pretty low. Could we top it, and end up with the most comprehensively informed average consumer?

“I think we could,” concedes Wallack. The goal of HealthSourceRI’s approach, though, is to simplify the information, present it as clearly as possible and then show a little confidence in the consumer. “They are making informed decisions, if we give them the tools,” adds HealthSourceRI spokesperson Maria Tacco.

That brings us back to the lack of auto-renewal. The exchange doesn’t want to be forgotten by members as an automated process – they want consumers engaging with the site and actively reassessing their options, getting used to the idea that they HAVE options, and keeping the insurers who put those options together on their toes. That faith may be bearing out – so far, with over a month left in the enrollment period, RI has a 78% re-enrollment rate. That may go up with more re-enrollees, or down if some re-enrollees don’t actually pay their bills. But it’s a surprisingly high number, beating many exchanges that actually have auto-enrollment you need to opt out of.

A final aspect that makes RI special: one prominent insurer that ends up with the vast majority of subscribers – Blue Cross/Blue Shield. Says Director of Public Relations Stacey Paterno, “We’ve always thought it was an important part of our mission to get all of RI insured.” She seems excited to have state-level support for that goal, and to see the new efforts to get people signed up. Blue Cross has, understandably, gone to their own great lengths to help with those efforts, including creating walk-in centers in Warwick and Bristol.

What’s Next?

“On the federal level, [policymakers] are looking at ‘what is full time?’” says Paterno. Right now, it’s 30 hours a week or more (resulting in a lot of 29-hour a week part-timers). It may change to 40. They’re also looking at what defines a “small group” – whether that’s 50 employees or less, or 100 employees or less. “Rhode Island has a lot of companies between 50 and 100, so that could be a significant change for us,” says Paterno. Small groups qualify for different rates than larger organizations.

Locally, there’s a whole new team in charge of the exchange now. They took the time to speak with us, even though Director Wallack had been on the job for all of two days. The transition seems to be the natural result of regime change as our governors revolve, and while the new leadership describes a “new energy,” the direction, mission and philosophy seem mostly the same. “I feel like the second-stage CEO at a start-up,” says Wallack, who has an extensive background in consulting on healthcare issues. She’s lived and worked in RI, but was recruited from Vermont by Gina Raimondo, replacing founding director Christine Ferguson.

“We’re past the joys and pain of the first year,” says Wallack,”and looking forward, we’re focusing on sustainability.” Her immediate priority is straightforward – get as many people signed up as possible before open enrollment for individuals ends on Feb 15. The more people are signed into the exchange, the better a success story HealthSourceRI has, and the easier it will be to make the case for keeping the exchange around.

Expect to hear more about the choice between keeping the RI exchange local and using the federal version. Most of those we talked to for this piece favored keeping it locally run. The HealthSourceRI group, obviously. Blue Cross as well: “We’ve invested a significant amount in reworking our systems to work well with the exchange,” says Paterno. “It’s an investment of roughly $6 million. We wouldn’t want to do it over again for the national exchange. And of course, it’s ultimately our members who end up funding added infrastructure like that. We have to pass the costs along.”

The economic argument for the federal exchange is that it might save money for the state (how exactly the federal maintenance expenses will be paid for isn’t exactly clear yet either – long term, it might be through funds from participating states, or all states, or some combination).

If we keep it in-state, it may be through supplemental fees charged to those who sign up through the exchange. Or it may be through an additional tax on all Rhode Islanders. Estimates vary from around $2/month to significantly more – if fees are charged only of those who use the exchange, the amount will naturally get lower as more people participate. About 28,000 Rhode Islanders are signed up through the exchange as of this writing.

The advantages of keeping RI’s own in-state exchange are a little less tangible. There’s the “control of your own destiny” aspect, and the fact that what’s been built seems to work better than the federal version (which makes sense, as a national gateway needs to accommodate a lot more information. An in-state version can conform to just the local quirks).

There may also be cost-controlling benefits to keeping an in-state exchange. There are opportunities to direct efforts at prevention and education that are unlikely to be as fruitful on a national scale. There may be opportunities for the exchange to apply cost-saving pressure on insurers and even providers. Whether these possible advantages will manifest remains to be seen, but in different ways Blue Cross and HealthSourceRI both seem to support that effort. “With the launch behind us, we hope this process will free us up to spend time on the affordability of healthcare,” says Paterno. Wallach also anticipates being able to use a successful, influential exchange to reduce costs of healthcare overall.

How? That might take a few forms – restructuring plans on an administrative level, and tweaking the interactions between providers and insurers to lower costs. The debate about whether providers are charging too much or insurers are paying too little is eternal, but the opportunity to reduce waste on both sides certainly exists.

The local vs. federal exchange is likely to be a big question for 2015. It’s an echo of the big federal question we’ll be facing in the coming years – “So, how do we pay for this again?”

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Special thanks for background information contributions from Tom Sgouros, Maria Tacco, Anya Rader Wallack, Jeremy Duncan, Stacey Paterno, Russell Gusetti and Elizabeth Roberts. Some national statistics cited from America’s Bitter Pill by Steven Brill.