"A lot of small companies are telling employees they either can’t afford to offer health insurance or if they do offer it, it’s going to cost them their first-born child," Simon says.

Simon employs 47 people in his six Fuel Mate convenience stores. Until a few months ago, he was among the small business owners caught up in what he describes as the health insurance "death spiral" of low employee participation, high claims and soaring costs. Many of his employees couldn’t afford the coverage he offered or didn’t feel they needed it, so just about the only ones signing up for the health benefits were those with chronic illnesses who ran up big medical bills. Their high insurance claims meant ever-higher premiums.

"Our costs kept going up and up," Simon says, "and there was no end in sight."

Then along came FirstPlan, a new health care coverage option offered by FirstCarolinaCare, a subsidiary of FirstHealth of the Carolinas. FirstPlan is for businesses with 50 or fewer employees. Under First Plan, subsidies are available from FirstHealth and other outside sources to help low-wage employees pay for their health coverage. In addition, employers who meet certain criteria can receive discounts on their premiums.

Those discounts—which can reduce premiums up to 20 percent—are called CareCredits. An employer can qualify for CareCredits by having a high rate of employee participation in the plan and by paying a larger percentage of the cost of coverage for employees and dependents. As an additional incentive, CareCredits also are given to businesses that have not previously offered coverage.

"We had never been able to offer any health insurance at all," says Carole Patterson, owner of A World of Children day care center in Seven Lakes. Now, with FirstPlan, she says, "The staff is thrilled."

Community Voices Initiative

FirstPlan grew out of an initiative by FirstHealth Community Voices initiative to find ways to improve access to health care for the medically underserved. The initiative was supported by a five-year, $2.5 million Community Voices grant from the W.K. Kellogg Foundation.

"We studied the uninsured locally and tried to better understand who they are and why they didn’t have coverage," says Lisa Hartsock, Administrative Director of FirstHealth Community Health Services. "We looked at the actual costs of providing care for the uninsured and found that their patterns of health care needs closely mirrored people who were already insured. They have the same pent-up demand, yet—contrary to what some had assumed—the amount of care they required was not greatly more expensive."

The high cost of coverage is the main reason so many small-business employees are uninsured. Yet the low percentage of people who have coverage is one of the main reasons for the high cost.

"Insurance is simply a mechanism for pre-paying future costs, and it only works if those who seldom use it help pay the costs for those who utilize services," says Ken Lewis, FirstHealth’s Vice President/Executive Director, FirstCarolinaCare. "For coverage to be affordable, there needs to be a large number of people paying for it and for healthy people to outnumber those who pose a higher insurance risk."

That leads to the problem with most health plans. The people who are least likely to sign up are the young and the healthy, who either don’t think they need insurance or can’t afford it. The people who really need insurance end up paying most of the costs.

FirstPlan changes that dynamic, making health insurance more attractive to younger, healthier people by making it more affordable. Employees of small businesses who earn less than $9 an hour can receive subsidies to help them pay for coverage for themselves and their families. The federal Health Resources and Services Administration awarded FirstHealth a $490,000 grant to fund subsidies for up to 500 low-wage earners and their dependents during HealthPlan’s first year.

Additional grants are being sought to help provide subsidies. However, Lewis and others believe that once enough people enroll, the plan can be self-sustaining and subsidies from outside sources may not be needed. FirstCarolinaCare is initially limiting the number of subsidized subscribers to 1,000.

"Once we reach that cap, we will go back and evaluate the plan to see how well it is working for everyone," says Rebecca Ballard, FirstPlan Coordinator.

FirstCarolinaCare offers health care coverage to employers in seven counties, but the subsidies are currently available only to lower-wage employees of businesses in Moore, Montgomery and Richmond counties. For employees to be eligible for subsidies, a business must have 100 percent participation in FirstPlan by workers who aren’t already covered by another plan.

Shared responsibility

FirstPlan is built on the concept of shared responsibility. Its success depends on the willingness of everyone involved to contribute something so that everyone can benefit. The FirstHealth hospitals—Moore Regional, Montgomery Memorial and Richmond Memorial—are charging lower rates for services they provide to subsidized FirstPlan subscribers.

"Right now, if someone who is uninsured requires care in one of our hospitals, we often end up writing off the bill," says Charles Frock, President & CEO of FirstHealth of the Carolinas. "But by helping to make it possible for lower-income people to get coverage, we stand to recover much more of the cost of caring for them. We see FirstPlan as a way to reduce our bad debt expense while providing more people with access to the care they need."

Practically all of the physicians in the area have agreed to discount their fees, too. Rather than accepting their usual FirstCarolinaCare rates, they are accepting lower rates.

"Everyone agreed that they wanted more people to have access to good health care," Hartsock says. "It is important that physicians have helped to develop FirstPlan and are making some concessions on reimbursement to make it happen."

When people have health care coverage, they are more likely to seek preventive care and to go to a primary care physician instead of a hospital emergency department when they are sick.

"That saves everyone money, because people are being taken care of in the most appropriate and efficient way," Ballard says.

‘A stroke of genius’

Lowell Simon of Fuel Mate thinks the FirstPlan concept is "a stroke of genius."

"It’s exciting to be able to offer coverage to our people at a reasonable price so they don’t have to worry about going bankrupt if they have a serious illness," he says. "It also gives us an important recruiting advantage. We are really proud to tell job applicants that we have affordable health insurance."

According to Frock, FirstPlan can help small business owners solve one of the problems that is most likely to keep them awake at night.

"It enables them to do the right thing and feel good about it," he says. "We also see it as a vehicle to improve the health status of our region. If we can provide more people with access to high-quality care and help them use it appropriately, then chances are good they will be healthier."

If FirstPlan succeeds here, it could very well become a model for improving access to health care in other communities.

"We are going to try to find ways to make it easier for this kind of program to be replicated and sustained by other community-based health plans," says Rose Young, FirstHealth Policy Director. "There are currently many financial barriers to sustaining a subsidized plan. We will be exploring ways to work with legislators and regulators to remove some of those barriers so that such plans can be developed in other areas."

For more information about FirstPlan, contact FirstPlan Coordinator Rebecca Ballard at 910-215-5257, or by email at rballard@firsthealth.org.