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Questions abound as R.I. health exchange is set to open

WARWICK — As president and chief operating officer of a small business in West Warwick, Philip Papoojian has one main concern about Rhode Island’s new health insurance marketplace: Will premiums be more affordable?

Like many business owners and families across the U.S, Papoojian, who runs Mereco Technologies Group Inc., has seen health care costs climb painfully high in recent years.

The new online marketplace, part of the federal Affordable Care Act, aims to bring change to the health care system that will ultimately lower costs through better, more efficient care.

But Papoojian isn’t yet sure whether he will purchase coverage from the marketplace, also known as an exchange. He plans to talk to his broker about the potential benefits and poll his 32 employees.

“In general, I think there’s a wait-and-see attitude,” Papoojian, who serves as chairman of the Smaller Business Association of New England, said at a recent health care summit in Warwick. “If the exchange offers lower premiums and better benefits, then I think there’s going to be a tremendous take-up.”

States across the country, including Rhode Island, are launching their exchanges Tuesday. While the first enrollment period begins then, coverage won’t start until Jan. 1. That’s when the vast majority of Americans will be required to have insurance or face a penalty.

HealthSource RI Director Christine Ferguson says the state is fully ready, though she expects some bumps along the way. Some places have had significant setbacks. Washington, D.C., which like Rhode Island is operating its own exchange, announced last week that it would open for enrollment Tuesday, but premium prices won’t be available until later because of glitches in the calculation of federal subsidies available for low- and middle-income individuals.

The marketplace in Rhode Island, where about 124,000 residents are uninsured in a population of just over 1 million, is putting a big focus on signing up small businesses. About half the state’s 30,000 small businesses offer health coverage now, though not all employees enroll.

Some small businesses will be eligible for federal tax credits through the exchange, but the credits are scheduled to end after two years. With many businesses in the state struggling now, though, even a sizable tax break might not be incentive enough to start offering coverage.

In outreach events around the state, Ferguson has been telling small employers that buying coverage through the agency will allow them to offer their workers more benefit options. She says Rhode Island is unique at this stage in offering what’s called full employee choice, under which companies can select a contribution level, rather than a single plan for all their employees. Employees then can choose from among multiple plans, depending on the coverage they need and how much they want to spend.

The new marketplace isn’t just about boosting the ranks of the insured, according to Ferguson. It’s about trying to fundamentally change the way people get care.

“This is the most important thing this state has done in a long time,” Ferguson said at the health care summit.

Still, questions abound, including how many will use it. HealthSource RI expects 70,000 to 100,000 people through the end of 2014. It’s also unclear exactly how much it will cost the state to operate the exchange beginning in 2015 once the federal funding runs out. Exchange officials estimate $17.9 million to $23.9 million a year.

“I think we’re heading in exactly the right direction,” said Kathleen Hittner, the state health insurance commissioner. “These are uncharted waters. Nobody’s done this before.”

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