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As the Jan. 1, 2013, deadline approaches for states to demonstrate to the U.S. Department of Health and Human Services (HHS) that they can operate a health insurance exchange, the next year will be critical for states in developing these online marketplaces. Amid the uncertainty surrounding health care reform -- from the potential for the U.S. Supreme Court to overturn the Affordable Care Act (ACA) to a new White House administration that could scrap the law altogether -- some states are banking on one of those scenarios to halt its implementation.

Not Rhode Island.

While more than half of the states have received initial federal grants to establish exchanges, Rhode Island is the first and only state to receive a second grant, worth $58.5 million. Officials from the White House and the Robert Wood Johnson Foundation have lauded Rhode Island as a leader in implementing ACA provisions.

Because of Rhode Island’s fast implementation of the law, Governing has arranged with state officials to track the establishment of Rhode Island's Health Benefits Exchange over the next year. The goal is to provide insight into what has worked for them, exploring how one state has overcome the challenges inherent to such an immense task.

Governing spoke with state leaders and reviewed public records from the Rhode Island Healthcare Reform Commission, headed by Lt. Gov. Elizabeth Roberts, to document Rhode Island’s progress thus far. Governing’s initial focus will center on the governance model; subsequent articles will look at the evolution of the exchange and new developments during 2012. 


Rhode Island is the only state in the nation in which its exchange was not established via legislation, but rather by executive order. In 2011, both chambers considered legislation to make the exchange its own quasi-public agency managed by 11 members. That would make it easier for the exchange to hire staff, negotiate with contractors and respond to unexpected issues that arise, said Greg Pare, spokesman for President of the Senate M. Teresa Paiva-Weed, who introduced the legislation.

The Senate bill passed its chamber but not the House due to language added during Senate deliberations addressing federal funding of elective abortions – namely that the plans offered in the exchange will not pay for abortion. The House did not vote on its bill.

Despite the legislative speed bump, work on the exchange moved forward. The first health benefit exchange workgroup, a subgroup of the health-care reform commission, began meeting in May 2011 to discuss and plan the project. Under that workgroup, several smaller subgroups were organized to participate in the conversation.

An interagency workgroup, co-chaired by Rhode Island Health Insurance Commissioner Chris Koller and Medicaid director Elena Nicolella, convened to ensure effective communication across the various state agencies that would be involved in the exchange’s development. Private consulting firms, such as the Faulkner Consulting Group and Wakely Consulting, have offered input as members of the exchange advisory committee, presenting private-sector perspectives on the deliberations. A stakeholder workgroup consisting of consumer associations and health-care providers rounded out the line-up of advisers.

In September 2011, Chafee issued the executive order to set up the exchange as a part of the governor’s office with a 13-member governing board. The governor has authority to designate parts of his office to address public health issues, said executive counsel Claire Richards, which is why the exchange was housed there.

A lawsuit by Rhode Island Right to Life and 28 legislators (out of 113) is challenging the executive order regarding the constitutionality of an exchange that wasn’t established by the legislative branch. The lawsuit is sponsored by a bipartisan group of legislators (21 Democrats and seven Republicans).

Barth Bracey, president of Rhode Island Right to Life, said his group initially became involved because of the abortion issue, but said that the lawsuit is focused on maintaining a separation of powers between the executive branch and the legislative branch.

“We got bypassed,” said State Sen. Harold Metts, a Democrat and one of eight members of the upper house to sponsor the lawsuit. “The administration has their role, and the legislators have their role. I think [Chafee] stepped beyond his.”

State law gives the governor the power to administer funds to expand benefits for people who lack insurance coverage, Richards said, which is the focus of the administration’s legal defense of the order.


Paiva-Weed expects to reintroduce legislation during the current legislative session to establish the exchange as a quasi-public agency, Pare said. While the agency would likely continue and build on the work done by the exchange board and workgroup, Senate leadership believes that an independent agency would be better able to respond to the evolving needs of the exchange, he said.

“State bureaucracy can be limiting when it comes to the kind of flexibility that would be needed for an exchange,” Pare said.

The legislative establishment of an exchange would “potentially” eliminate the need for the lawsuit challenging the executive order, said state Sen. Lou DiPalma, a Democrat.

For his part, Chafee is supportive of such legislation as long as it removes the abortion language that stalled the Senate bill last year, Richards said. The work of the exchange board and workgroup could be “easily transitioned” from the governor’s office to a quasi-public agency. “We consider both models to be valid,” she said.


Chafee stated the need for a variety of health-care backgrounds in the makeup of the exchange advisory board, which would include members of the governor's administration and appointees selected by Chafee. The Rhode Island governor said his intention was that "the board's composition reflects a range and diversity of relevant experience, skills, backgrounds, and geographic and stakeholder perspective."

Four members of the governing board (Richard Licht, the director of the Department of Administration; Koller, the health insurance commissioner; Steven Costantino, the secretary of the Executive Office of Health and Human Services; and Dr. Michael Fine, the director of the Department of Health) would fill seats as part of their official duties. The other nine would be selected by the governor: two from consumer organizations, two representing small businesses and five other various stakeholders, including insurance companies and health-care providers. The board is headed up by former U.S. Attorney Meg Curran, with Donald Nokes, top executive for IT company NetCenergy, as vice-chair.

The members rounding out the governing board include:

  • Mike Gerhardt, retired health insurance executive
  • Pamela McKnight, non-practicing Neurologist
  • Tim Melia, UFCW Local 328
  • Marta Martinez, Progresso Latino
  • Dwight McMillan, The Basics Group
  • Linda Katz, The Economic Progress Institute
  • Alex McCray, Year Up

Since its appointment in September, the exchange board has overseen the marketplace’s development in conjunction with the commission workgroups. Final decisions would be made by Chafee after receiving their recommendations.

The process has been fairly smooth, state officials agreed. “We all know each other and like each other,” Medicaid director Nicolella said. But each agency does recognize has its own responsibility for “keeping our trains running,” she added. The Medicaid office faces an increase in enrollees under the ACA, and the exchange’s development is only one part of its preparation.

“We’ve worked together a lot,” Koller said. “There is a mutual respect and a recognition that people want to do the right thing.”

Next week: Governing will focus on the decision-making behind how the online exchange will work and how consumers will use it.

Do you have a question about Rhode Island's implementation of the Affordable Care Act? Submit your question as a comment below, in an e-mail to, or in a tweet to @dylanlscott. Your question may be addressed in a future post.

This post has been updated to clarify that Gov. Chafee's office believes state law, not the constitution, gives the governor the authority to create the exchange.