PROVIDENCE – For much of the past three decades, Christine Ferguson has been at the center of the whirlwind around the national debate on health care reform. In the 1990s, as a top legislative aide to then R.I. Sen. John Chafee, she designed a bipartisan legislative package for health care reform that could not muster enough support in Congress to be enacted.

In the mid-2000s, Ferguson helped to write and design the Massachusetts health care reform plan for Mass. Gov. Mitt Romney, the forerunner of the Affordable Care Act.

In 2012, Ferguson took on the task of creating and directing Rhode Island’s health insurance benefits exchange, known as HealthSourceRI. As part of her efforts, she attempted to make the actual costs and benefits more transparent to the consumer, offering product comparisons.

In late December of 2014, Ferguson lost her job as director of HealthSourceRI; incoming Gov. Gina Raimondo then appointed Anya Rader Wallack to take Ferguson’s place.

[It should be noted that Ferguson was the first government official to reveal the ongoing software problems with the implementation of the United Health Infrastructure Project, or UHIP, identifying some $9 million in extra costs incurred in 2014 as a result of having to perform manual overrides to correct glitches in the Deloitte-designed system. Her warnings, presented in a report to Raimondo in 2015, were apparently ignored.]

Now, Ferguson is busy working as a consultant, helping to design a way to make the information around the actual costs of health care become more transparent to consumers. She still speaks in a forthright, direct, sometimes blunt, confident style.

ConvergenceRI recently spoke with Ferguson about the current state of health care delivery in America and the ways in which the market-driven players are responding to the current confusion.

Here is the ConvergenceRI interview with Christine Ferguson, who provided her insights into the way that the health care delivery system is reconfiguring itself in the absence of a national legislative mandate.

ConvergenceRI: How would you describe the current health care landscape in the U.S.?
FERGUSON: I think from a business perspective, if you look at what’s going on, insurance carriers and providers are focusing their efforts in the Medicare and Medicare Advantage areas and maintaining their involvement in the large group and large self-insurance group areas. They are also focused on contracts with state and federal employees, looking at predictability around payments.

Everyone is also focused on defining what performance- and value-based contracts mean, with lots of variations and challenges in those areas, and the competition is fierce.

From a policy perspective, anybody who is an insurer, a carrier or a major provider, or offering provider-based insurance, they’re looking for markets that are the most stable, that have the clearest rules of engagement – Medicare Advantage and Medicaid.

The small group and individual markets are becoming increasingly volatile and very difficult to manage; the pricing does not bear any resemblance to what the costs are. There is a lack of stability.

ConvergenceRI: What comes next, from a policy perspective?
FERGUSON: I’m not sure what is going to happen next. The Republicans have taken some approaches that are based on [what I believe is] an incomplete understanding of the issues around market volatility.

If they can’t reach consensus – and I’m not sure that they can, most of the activity will go through regulation and pricing [as determined by] Health and Human Services.

It’s still a very opaque process; it is very difficult to figure out what is going on. We are still in a period of tremendous uncertainty – at least in the markets that involve small business and individuals.

Other markets are moving forward on payment reform and new innovative ways to manage care through benefits design changes.

But, on the small group and individual side, I really think we’re going to see a lot more volatility, with fewer carriers in the market. It’s only going to get worse – until there is some consensus about what happens next. It’s a shame.

ConvergenceRI: Looking at the numbers in Rhode Island, it seems as if the trend is moving away from full commercial insurance products toward self-insurance coverage by companies, with only about one-quarter of the market now purchasing full commercial coverage, according to the latest OHIC numbers. Is that accurate?
FERGUSON: Yes. What brokers are doing is to put together insurance policies that allow smaller and smaller businesses to create a self-insured package, one that combines catastrophic coverage with primary care and prevention coverage on the front end.

The trend has being going on for the last four years. The broker community has been trying to respond to the concerns that smaller businesses have.

They’ve come up with some interesting models, moving small businesses out of buying a fully insured [commercial] product, but protecting them with reinsurance on the back end, with a lot of the upfront costs covered through a variety of HRAs [health reimbursement arrangements] and HSAs [health savings accounts] for employees, getting the small businesses out of the regulated world and into the ERISA world [federal regulations governing the self-insured market].

In Rhode Island, there are a limited number of carriers and one dominant carrier. Tufts Health Plan is coming in and trying to pull out the better risk pools.

In other markets outside Rhode Island, the penetration is even bigger.

ConvergenceRI: Where do you think we need to go from here? Is there room for a bipartisan approach? How do we deal with escalating medical costs? Is that being driven by increased utilization?
FERGUSON: I think the difficulty with medical costs comes from [two things]: the cost of drugs and the costs of treatment in hospitals. They are two different animals. Primary care and preventive care, that’s not what is driving utilization and increased costs.

Increases in medical costs [are being driven] by the hospital side and the drug side and the medical device side.

The problem is that the only entities that are really involved in contracting for those services and determining prices are the carriers. The government is not fundamentally involved in that.

When you talk to the providers, they say the carriers have all the negotiation cards. From the carriers’ perspective, they say the hospitals have all the cards. The same thing is true on the pharma side.

Nobody is looking at what is happening to the patient.

One of the interesting things when you look at all of the different plans and designs and different performance-based outcomes, and what the patient is actually experiencing, and how that out-of-pocket expense applies [to their ability] to adhere to treatment or engage in treatment, we’ve created some really significant barriers to care by shifting the cost to individuals.

From my perspective, when you talk to people who are in leadership roles, one thing that becomes really clear is that the people who are making decisions, who are trying to come up with new ways to deal with old problems, they have never paid more than 20 percent of the premiums and co-payments.

Reporters [that cover health care], the percentage that they pay, compared to normal people that are not in those kinds of companies [that offer generous benefits], is often miniscule.

The financial implications on a patient’s ability to adhere to treatment, and to do the things they’re supposed to do, is often not reflected [in the coverage].

ConvergenceRI: Is there a way to remedy that?
FERGUSON: One of the things that I’ve been working on is an effort to pull all the information out from [a health insurance library] that has all the state employees and federal employees in the individual and small group markets across all the states, looking at what the total package of care looks like at an individual level, depending upon which of those groups you’re in.

It’s telling. Many of the people in the system have never seen what an actual treatment plan [looks like], what the cost looks like to the patient and what is the total medical expense.

It creates very different insights, between the people who are in leadership roles who have very minimal costs, and the rest of us.

The work has been done for a number of private sector entities; I’m deciding whether or not to write about it.

ConvergenceRI: Is the idea on continued investment in the business model of a hospital-based health system becoming obsolete? What might be a potential better business model?
FERGUSON: It depends on what the purpose of the investment is: is it to create maximum return or to make a nonprofit type of investment? The current system includes a conglomeration of all kinds of purposes.

The investments in community health centers over the last five to seven years have built the possibility of a pretty sophisticated non-hospital-based system. Most middle-class people have never experienced that level of sophistication. [The community health centers] have incorporated non-traditional approaches – what are really the key to [achieving] better health outcomes, with wrap-around services and the integration of behavioral health and social services. So, we do have alternative models.

The problem with different models and different margins of profitability is that there is no uniform way of unifying payments except through the carriers and contracts with the carriers. The challenge is that you have to have everyone at the table.

ConvergenceRI: Do you see a way of achieving consensus on health care moving forward?
FERGUSON: At the federal level, we have no consensus in America about what it is that we want. We’re still going in the same [unsustainable] direction. The share of medical costs has risen from 5 percent of GDP to 20 percent of GDP because we can’t collectively agree on what we want out of the system.

We agree that there should be health care for poor people and for older Americans. For the rest of us, the choice is to go to work for the government or a big company and you’ll have health care; work anywhere else and you’re at risk.

ConvergenceRI: What are the points of leverage for patients and consumers?
FERGUSON: You are starting to see much more awareness and the development of products that demystify the system and give people the ability to see what is going on, with more transparency.

The tools are starting to come out to help people navigate the system. I think it is going to make a difference in how people use the system, and what they want to choose, in terms of activity. Health care is not like a 401K savings plan; it is not a passive activity; it is likely that you are engaged in the health care system on a week-to-week basis.

One of the experiences at the exchange was what happened when consumers and patients became more knowledgeable about health insurance products. The dominant insurer lost 40 percent of [its previous market share].

Government and the people in leadership roles need to understand and incorporate patient experiences right now, with more tools and more transparency.

When patients and consumers have more information at their fingertips, you’re going to see a change. There are all of these little entities that aggregating the data into something that consumers can understand, with the technology and access to information growing exponentially, so the system can’t keep it out.

All of the investment in health IT has been about speeding up the transactions and making it simpler. It has been all about billing and payments and coding; it had nothing to do with health outcomes and whether something is working for someone, or how the data shows what the best treatment path is.

The systems were designed for processing transactions. The platforms don’t talk with each other; there are some nine or 10 health IT systems and there is no interoperability.