Rhode Island Firm Uses Health Exchange For Employees

Philip M. Papoojian had some apprehension when he first considered offering the RI Health Insurance Exchange, HealthSourceRI, to his employees. Papoojian, president of Mereco Technologies Group Companies in West Warwick, R.I., was concerned that the thirty-two employees would be overwhelmed by having to choose from the sixteen plans offered through the Exchange. Every year, Papoojian, after consulting with insurance brokers, would decide on one or two plans to offer to employees, and the employees had little say in the matter. The portfolio of plans offered by the Exchange promised better employee involvement and choice, as they would now be able to exert some control over their own health insurance destinies.

The constant increases in health insurance premiums over the last ten years remained a major cause of concern to Papoojian. Expenditures on employee health insurance were the second largest expense for the company, and this year, an unbudgeted 9.4 percent composite increase threatened to disrupt the careful financial planning and budgeting that is required by small businesses to maintain adequate cash flow to fund the business. Effective on the April 1, 2014 renewal date, the composite increase included a 15 percent increase in the individual plan premium and an almost 20 percent increase in the family plan premium. It was interesting that this composite increase also included a 4.4 percent allocation passed on by the insurer for ACA taxes and fees.

Mereco, a manufacturer of specialty adhesives and coatings for high technology customers, had weathered many economic storms since being founded in 1960, but rampant and totally unpredictable health insurance premium increases continually eroded profits that could be reinvested in the business. The fact that the company was notified about the increases six to eight weeks before the renewal date added to the chaos.

After presentations by both HealthSourceRI staff and insurance brokers, Papoojian decided to put the decision to a vote. Employees would be able to vote to use HealthSourceRI and choose their own health insurance policy, or stay with the current offering of two plans and absorb the 9.4 percent increase.

The employees of Mereco, by large majority vote, chose to use the Exchange and to utilize full employee choice. In the end, the employees chose three plans. They liked the idea of personally having the ability to review the portfolio of sixteen plans and to choose their own plan. This year it was just three plans, but Papoojian expects that employees will expand their participation to consider other plans in the 2015 renewal period, once their familiarity and comfort level with the new Employee Choice option offered by the Exchange is achieved.

Papoojian was aware that, as the employer, he could limit plan offerings through the Exchange, but because the employees voted to go through the Exchange, he wanted to provide them with the widest range of options available, options not available with the prior plan design. By going through the team process of the evaluation of the sixteen plans, the employees became much more health insurance “aware” and have greater control of their own destiny.

Since all of the chosen plans meet the high deductible health plans criteria, Mereco decided to keep the deductible reimbursement program active through an HRA for all participants.

The enrollment process through the Exchange was very smooth, and with the assistance of the Exchange staff, the employees were guided effortlessly through the details. A glitch did occur with the processing of the memberships, but it was attributed to a software problem and was quickly resolved by the Exchange and the insurer.

While it is too early to tell if true cost reduction can be achieved through the pooling of purchasing power and resources behind the Exchange concept, it is certainly possible that employee premium costs can be reduced, sometimes dramatically, by their own personal decisions related to which plan and deductible levels they choose.

Papoojian is convinced that health care cost reductions are beyond the capability of the currently segmented private sector consisting of hospitals, providers, insurers, and the broker community and thinks that the Exchange concept is the last best chance for true health care reform to take place in Rhode Island before cost escalation eventually forces default to a single payer system.

Papoojian noted that Rhode Island is usually rated at the bottom when it comes to business friendliness and economic development, but that its homegrown Exchange has been ranked at or near the top nationally due to its unique and user-friendly design. While not perfect, he thinks it offers Rhode Island the possibility of being Number 1 in something extremely important that carries with it a highly visible national ranking.

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