Area small business will be the first to reap benefits of proposed regional health care plan

By Steve Habel

Small businesses – the bread and butter of commerce and industry in any thriving city or municipality – always seems to get the short end of the stick when it comes to being able to provide affordable healthcare for their employees.

There may be relief on the way for those in the Austin area. Under the umbrella of a non-profit organization called the Central Texas Regional Health Coverage Project, a collaboration of groups in the region have banded together to offer, on a multi-county basis in Central Texas, a basic health plan at an affordable price for small employers and their employees.

The plan would, in theory, improve the health and access to healthcare of those insured by program, help small businesses remain competitive and sustain a healthy workforce, expand the size of the insured pool in Central Texas and add liquidity to the region’s healthcare system, all while encouraging patient responsibility in their health.

“The Central Texas effort began as part of a statewide effort initiated by Galveston County and UTMB to encourage local communities to pursue these programs,” said Ann Kitchen, executive director of the Indigent Care Collaboration of Central Texas. “The Galveston group was pursuing a program based on a similar model in Muskegon, Michigan. Local groups in Central Texas, El Paso, Houston, Galveston, Dallas, and San Antonio created Texas Communities HealthCare Coalition, which supported passage of legislation to help our communities create these programs.”

McQueary Henry Bowles Troy, the Dallas-based insurance brokerage and consulting firm and a driving partner in the Central Texas Regional Health Coverage Project, helped develop the group’s regional plan.

“If this plan works it will relieve pressure on healthcare professionals and facilities who provide care for those who are not insured, thereby relieving pressure on insurance rates for those who are insured,” said Becky Parker, an Austin small group account executive for McQueary Henry Bowles Troy. “We believe people should be insured.”

Using the Indigent Care Collaboration of Central Texas as a convenor for a group of businesses, healthcare providers and community leaders in Williamson, Travis, Hays, Burnet, and neighboring Central Texas counties, the Central Texas Regional Health Coverage Project’s Regional Advisory Council will decide the program parameters and create a new corporation to run the program.

The project’s Regional Advisory Council numbers more than 60 individuals. Key organizations that have spearheaded this effort since it began in 2006 include ICC members (Travis County Healthcare District, Seton, St David's and the Austin-Travis County Department of Mental Health and Mental Retardation), AARO and local chambers of commerce in Travis, Williamson and Hays Counties.

The program is focused initially on employees of small businesses defined as having two to 49 employees that have not had healthcare coverage for a period of time. Until proven financially viable, the program will likely not address sole proprietors or larger businesses.

“Also, there are limitations on total benefits payable in order to keep premiums affordable,” Kitchen said. “Emphasis will be on increased meaningful and effective access to primary care and on improvement of the collective health of those enrolled in the program.”

The program is hopes to draw a lot of participants, and quickly. The Central Texas Regional Health Coverage Project has an initial target of at least 10,000 employees by the third year of operations. In healthcare, as in virtually every other scenario on Earth, there is strength in numbers.

A few more details, please

The proposal is to begin by offering two health coverage plans – both offer a basic level of health coverage, including doctor visits, prescriptions, hospitalization, dental and mental health. The main reason for the price difference between the two are the upfront costs (deductibles, co-pays and coinsurance) and limitations of extend of coverage (annual maximums).

While there will be pricing differences based on age and sex, the average cost of the coverage will range from $184 (low-cost plan) to $234 (mid-cost plan) per month for adults, with the costs split between employer and employee.

If you have a business or are an employee who cannot afford those rates, the Central Texas Regional Health Coverage Project plans to offer a three-share option so that the premiums will be split between the employer, the employee and a third-share to assist individuals with lower incomes for the cost of the plans.

The proposal will offer coverage through a broad network of providers, physicians and hospitals throughout the region who accept the program’s payment rates, disease management and other components. The program will offer reasonable rates to providers.

Targeted launch date for the program is August 2008.

Trade-offs: coverage versus affordable premiums

The real challenge for the Central Texas Regional Health Coverage Project is designing a useful benefit package while keeping premium costs low. Proposed plans all include physician, hospital, medication, mental health, dental services, but use coverage limits, annual maximums, deductibles, co-pays, coinsurance to keep premium affordable.

“Health Insurance is a complicated issue in the United States as well as right here at home,” Kitchen said. “This program could be different from commercial insurance in three main aspects.”

First is the program’s underwriting. Small businesses are usually treated as one large pool. Most insurance underwriting for small businesses adjusts rates upwards for industry type and business size and makes employees go through a health status application process. While the proposed plans will make some adjustments for age and sex, the plans will not use traditional health insurance underwriting.

Secondly, the new organization will be non-profit. Rather than directing excess cash flow to shareholders or paying executive bonuses, the proposed project plan proposes using those funds for working capital to grow the organization, reduce premiums or pay back community investment.

And third, the organization will be actively partnered with members in their health. Done well, offering incentives and tools for individuals to prevent illness and manage chronic disease can reduce the costs of caring for members as well as improving their quality of life.

The project will also utilize health information technology to streamline administrative costs.

Can a program like this really make a difference?

Parker and her firm surely think so. People are more appreciative of their employer when benefits are provided, and it is easier on them to be insured through their employer rather than have to buy it on their own,” she said. “After all, individual coverage is sometimes not an option for those who have experienced health problems. Employers who offer insurance benefits are also more likely to retain employees and can even use benefits as a recruiting tool.”

This project will be premium-subsidized, so community philanthropy and involvement will be keys to its success.

“Our belief is that all who will be involved in this program will take a bit of ownership and have pride that we are helping our neighbors,” Parker added. “That may mean a philanthropic contribution, a commitment by an employer to pay a bigger portion of the premium, a lesser reimbursement rate to a hospital, a smaller commission to a broker (if brokers are utilized at all), whatever it takes to keep the plan viable.”

While these plans aren't for everyone and they aren't as comprehensive as many insurance plans, they can fill a great need in the community.

“If employers chose to participate, it will offer an insurance buffer to their employees who work but whose employers have been unable to find insurance at an affordable price,” Parker said. “Our hope is that everyone involved truly does see this plan as a community owned plan to keep it going; if this were easy every city would be doing it. The last thing we want is for an insurance plan, of any kind, to fail. Insurance is already perceived as hard to work with, and we wouldn't want to further that perception.”

Measuring success

The project will have built in metrics to measure the program’s success, the first of which will be the total number of enrollees as compared to the project’s business plan financial projections.

“The program's success will be measured on meeting budget targets, which are based on number of enrollees and medical expenses within projections,” Kitchen explained. “Engaging members in responsibility for their own health is a basic goal of the program, so we will also measure prevention and disease management in response to incentives offered to members.”

Additional metrics include the retention of members, the ability to keep premiums in their initial range year after year, the number of providers participating and the level of philanthropic support.