PROVIDENCE – In her opening remarks at the Rhode Island Business Group on Health’s legislative and advocacy breakfast on March 20 at the Providence Marriott, Gov. Gina Raimondo framed the challenge facing Rhode Island about the future of HealthSourceRI, the state-run health benefits exchange, in an unintended but accurate fashion.

“Everyone is this room knows that the Affordable Care Act is a fact,” Raimondo began. “We have a health exchange. If we give it to the federal government, it’s going to cost something; if we keep it here, it’s going to cost something. Our theory is: keep it here, and run it in a way that is less expensive, so that the taxes are lower for businesses and individuals, to keep it here and do it better.”

In Raimondo’s proposed FY 2016 budget, new assessments on health care premiums are expected to generate about $11.2 million annually, with the money used to pay for HealthSourceRI. The new charges would take effect beginning Jan. 1, 2016, when the coverage year begins for health insurance.

[Under the budget plan, a 3.76 percent surcharge would be added to premiums to all individual health plans purchased by Rhode Islanders; a 1 percent surcharge would be added to premiums in health plans purchased by small employers.]

The challenge she gave to Anya Rader Wallack, Raimondo continued, was to keep the exchange in Rhode Island and to do it on a “skinnier” budget. “Change is coming,” she said. “Let’s be in the front of it.”

The problem was, that for many people attending the breakfast at the Marriott, the Affordable Care Act was not a fact, but a disliked fact.

And, for many of them, any tax on Rhode Islanders and their businesses was a disliked tax, in a time of budget deficits that demanded fiscal restraint.

Much of the panel discussion that followed Raimondo’s remarks was focused not so much about how to get to yes, but rather, how to get to no – and to limit the cost to Rhode Island taxpayers.

The panelists were clearly not moved by Sen. Sheldon Whitehouse’s presentation, as he rolled out his three familiar slides, filled with incontrovertible facts: health care expenditures had risen to $2.8 trillion in 2012 from $27.4 billion in 1960; that despite the highest per capital spending in 2011 of any nation, the life expectancy in years was far below many countries, or that the U.S. had the highest share of health expenditures as a share of GDP in 2012.

The great divide about how to fund the future of HealthSourceRI, and whether it should be a state-run enterprise or turned back over the federal government, much like the ongoing political debate about climate change, is not about common sense. It is not about the burden of health care spending on the economy, or more aptly, the disparity between health care spending and actual health outcomes.

Rather, it has become a political Rorschach test about President Obama and what his detractors deride as “Obamacare.”

Witness the fact that the Republican leadership in the U.S. House of Representatives recently celebrated the fact that it had attempted to repeal, dismantle, revamp and defund the Affordable Care Act some 54 times since the law was enacted.

The opponents
Panelist Robert Hackey, a professor at Providence College in Health Policy and Management, challenged the effectiveness of HealthSourceRI, recommending that the state impose a user-fee on the Rhode Islanders who bought insurance through the exchange to pay for its operation.

Hackey also advocated turning over the state-run health benefits exchange to the federal government – but to wait one budget cycle, to be prudent, until after the Supreme Court reached a decision in the pending case about the legality of tax subsidies offered through the federal exchange.

“We are struggling with a significant budget deficit,” Hackey said. “I think it’s not a question of whether we pay but how we pay, going forward.”

Fiscal restraint, Hackey continued, “has to be the order of the day. It has to be a fiscally lean system. As the General Assembly starts to think about how to fund this, I personally favor a user-fee model."

Panelist Gary Sasse, founding director of the Hassenfeld Institute for Public Leadership at Bryant University, suggested that any financial fix to HealthSourceRI should be short-term and temporary, given the upcoming election in 2016 and the potential that there could be a new president elected who would support the repeal and the dismantling of health care reform law.

“We have an election in two years,” Sasse said, as part of a rambling presentation. “What we talk about with Obamacare is likely to change. I would urge caution in making policy.”

For Sasse, the question was a matter of scale. Rhode Island, as a small state, doesn’t have the scale to make its health benefits exchange sustainable or affordable.

Sasse lamented the fact that the establishment of HealthSourceRI was not done as part of a legislative process, and that the exchange was set up without a budget.

In terms of financing, Sasse said he agreed with the proposal by Hackey to create a user-fee.

“Any tax needs to be viewed as part of a total tax structure, and to do it [in a way] that causes the least economic harm.”

The legislative agenda
Panelist Rep. Joseph McNamara, the chair of the R.I. House Health, Education and Welfare, provided some insight into the legislative analysis that the R.I. General Assembly would undertake looking at the proposed budget for HealthSourceRI.

McNamara quoted R.I. House Speaker Nicholas Mattiello as saying that when you looked at the money being put into this program, it’s like we’re building a Masserati.

“I told him: we’re building a Masserati, but what we really need is an F-10 pickup truck that will carry the load of a smaller population,” McNamara told the audience at the breakfast.

The legislative analysis of this budget item, McNamara continued, will look at whether HealthSourceRI can be self-sustainable.

“We can’t rewrite history,” McNamara said, but it would have been much easier if we started this process with hearings and the legislative process.

Counter-punching
For her part, panelist Anya Rader Wallack, the director of HealthSourceRI, kept her comments low-key, occasionally counter-punching.

When one of the panelists said that there was a difference between spending federal money and state money, because the state money was ours, Wallack said: “Frankly, I hate talking about federal money like it’s someone else’s money. I don’t find it to be a compelling argument.”

Whether it’s their money or our money, she continued, “It’s time to figure out how we can do this efficiently.”

Wallack also challenged the concept of a user fee promoted by Sasse and by Hackey by saying it was a very difficult model in terms of appropriations.

And, Wallack talked with some candor about the problems HealthSourceRI had encountered with UHIP, the state’s massive $200 million health IT infrastructure build out as a major problem with the state-run exchange’s operation.

It’s a problem that many people – the panelists, the audience, legislators, and the news media – may not necessarily understand.

But it gets to the heart of customer service complaints and higher-than-anticipated administration costs of HealthSourceRI.

And Wallack talked in detail about the problems during an interview in her office with ConvergenceRI on March 17.

The problems with UHIP
Since the last time ConvergenceRI talked with Wallack at HealthSourceRI headquarters in mid-January, the director has downsized her office to a smaller room, reflective perhaps of the right-sizing that she seeks to implement at the agency to live within an $11.2 million annual budget.

On the wall is a framed Sabra Field wood block print of a Vermont landscape, given to her by former Vermont Gov. Howard Dean.

Among the cuts that have occurred already at the agency is an end to some contacts with data analytics consultants, Wallack said. “We have retained some data analytics,” she said. “We no longer have the Star Trek Enterprise division.”

Wallack had been conducting a series of media interviews – with the Providence Journal, with The Providence Business News, with Rhode Island Public Radio – to “make sure that people understand what was being proposed by the Governor in the budget.”

There is a lack of understanding, she continued, about the range of options that Rhode Island has.

“There seems to be a perception that we give this up to the feds and it won’t cost anything, or that we can impose a premium assessment on just users of HealthSourceRI; neither of which is true,” Wallack said. “Or, that we’re the only state imposing this; nope.”

Hadn’t Wallack’s predecessor, Christine Ferguson, proposed much the same thing?

“Yes,” Wallack said, “but it didn’t quite sink into the consciousness.” Rhode Island gets to choose, she continued. “You have to choose, A or B.”

The current FY 2016 budget proposed by Raimondo contained a line item under UHIP, the Unified Health Infrastructure Project, for $6.2 million, marked as an expenditure by HealthSourceRI. What was that expense?

“Those are expenses that we have to pick up under federal law,” Wallack explained. “Under federal law, we have to start picking up certain categories of operating expenses, things like rent and certain maintenance and operation costs associated with UHIP; we have to pay for starting in Fiscal Year 2016.

Because of glitches in the software system, information about some customers who have purchased health insurance through HealthSourceRI have arrived at their doctor’s office, only to be told that there is no record of them having insurance.

Have the issues with UHIP, which resulted in about $10 million in unexpected administrative costs in 2014, been resolved?

Not yet, Wallack said, but HealthSource RI is working on it. “I do think we’re making progress. But that continues to consume a lot of time and attention around here.”

Wallack continued: “It is the most important element of our survival [emphasis added].”

Has the governor contacted Deloitte, similar to the way that former Gov. Lincoln Chafee contacted HP to resolve problems with software at the R.I. Department of Motor Vehicles?

“I think we have their attention,” Wallack said. “They are aware.”

Is there any leverage to say, if Deloitte is not fixing the problem, the costs don’t come to HealthSourceRI, they come to the contractor?

“I think anytime you enter into contracts, and you have performance requirements, there’s the potential, if your contractor isn’t performing, to recoup some of that.”

A case in point

On March 11, HealthSourceRI apparently sent out a letter to people enrolled in the Medicaid program for health insurance, terminating them, according to a source that received such a letter. The reason given: That person’s household income was greater than Medicaid requirements.

When that person called HealthSourceRI to ask about the apparent termination, she was told: it was “a system error,” that everyone received it, and to just “disregard” it.