• Employer-based insurance;
  • small group market;
  • health reform;
  • state innovation;
  • wellness

Objective. This study analyzes what design elements inhibited enrollment in HEALTHpact.

Study Setting. HEALTHpact is a high deductible plan with a premium capped at 10 percent of the average Rhode Island wage. Deductibles are reduced if enrollees meet wellness criteria.

Study Design. Qualitative case study.

Data Collection. Archival documents and 23 interviews.

Principal Findings. Inclusion of a subsidy would have led to lower premiums and more generous coverage. Although priced lower than other plans, HEALTHpact still did not offer good value for most firms. Wellness incentives also were too complex.

Conclusions. Subsidies for purchase of insurance coverage are critical to national reform of the small group market. Designers also will need to carefully balance program complexity with innovation in encouraging wellness and product appeal.