AT THE ASSEMBLY – Health Bill Seeks to Lower Costs for Insurance
By ELIZABETH GUDRAIS Journal State House Bureau
Small businesses may be able to afford to offer health insurance to employees under a bill supported by large insurers.
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PROVIDENCE – The lieutenant governor and Democratic lawmakers yesterday unveiled the second piece of a health-care reform package, proposing to lower health-insurance premiums for small businesses by creating a “reinsurance fund.”
The money in the fund — up to $3 million a year, according to this proposal — would come not from taxes, but rather, from the state’s two largest insurers.
That money would go to cover most of the cost of claims above a certain threshold, making it less risky for insurers to cover employees of small businesses, and consequently, making insurance less expensive for those employees — by an estimated 40 percent, proponents say.
Dubbed the Rhode Island Affordable Health Plan and Reinsurance Program, the proposal would “provide needed assistance to our state’s small businesses that are being strangled by rising health care costs,” Lt. Gov. Charles J. Fogarty said at a news conference with state Sen. Elizabeth H. Roberts, D-Cranston, who plans to introduce the bill in the Senate. (They said state Rep. Brian Patrick Kennedy, D-Hopkinton, would introduce it in the House.)
The insurance plan would be open to employees of companies with fewer than 50 workers, and at which at least 30 percent of employees are paid no more than 250 percent of the federal poverty level. It would require employers who enroll in the plan to pay at least 50 percent of the premium for their employees.
The reinsurance fund would cover 90 percent of the cost of claims above a certain amount — to be set by the state health insurance commissioner, but Fogarty used the example of $5,000 — up to a maximum of $75,000 per person per year.
The bill would empower the commissioner to raise up to $3 million a year “through an assessment to be imposed on all health insurers, health plans and health maintenance organizations that provide coverage to at least 75,000 Rhode Island residents.” Practically speaking, that language limits the assessment to two companies: Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare.
Through spokeswomen, both insurers said yesterday that they wanted time to examine the proposal before commenting in detail. Speaking for Blue Cross, Kim Keough said the company “commended” Fogarty, Roberts and Kennedy for proposing the legislation. United spokeswoman Deborah Spano concurred: “We do support efforts to bring more affordable health care to small businesses and individuals.”
Fogarty acknowledged the rate decrease he predicts for small businesses would require a rate increase for other premium payers, but said the increase would be spread broadly across all subscribers. The $3-million reinsurance pool represents just a tiny percentage of the $1 billion in premiums paid annually to Blue Cross and United in Rhode Island, he said.
Fogarty, a Democrat who is expected to challenge Governor Carcieri’s bid for reelection, and Roberts, who’s running for lieutenant governor, were joined at the lectern by two members of the business community: Jerry Meyer, executive director of the East Greenwich Chamber of Commerce, and Josh Miller, the owner of Trinity Brewhouse and president of Providence’s Downtown Merchants Association.
Miller, who also sits on the state Health Insurance Advisory Council, said the current method of setting premiums for small businesses encourages employers not to hire workers with preexisting health conditions, or who may simply be older or overweight, because employers are penalized with high rates if a single employee has extraordinarily high health expenses. The Fogarty-Roberts plan would require insurers to treat everyone in the plan as a single, large group.
“The community rating component of this is going to eliminate that potential for discrimination in the workplace,” Miller said.
Fogarty and Roberts say their plan would allow more small employers to offer health insurance because doing so would no longer be prohibitively expensive.
The plan would also be open to individuals who are not eligible for insurance through their employers, are not eligible for Medicare or Medicaid, and whose income does not exceed 250 percent of the poverty level. The framers intend this as an alternative to Blue Cross’ Direct Pay plan, which is in the middle of a rate hearing before the health insurance commissioner on its request to raise Direct Pay premiums by 20 to 30 percent.
The bill would direct the health insurance commissioner to set a maximum annual enrollment, based on the $3-million fee cap and a calculated average payout per member, and suspend enrollment once the number of members reaches that limit. The commissioner would also be responsible for defining a standard benefits package offered.
Fogarty and Roberts said they based their 40-percent rate-cut prediction on actual results from a similar plan in New York. Indeed, their legislation is modeled on the New York plan, although that state’s plan involves a state subsidy.
This is the second in a series of health-care initiatives from Fogarty and his allies. Last week’s proposal was the Fair Share Health Care Fund, which would require employers with at least 1,000 employees to pay at least 8 percent of payroll toward employee health insurance, or pay the difference into a state fund.
Meanwhile, Governor Carcieri announced yesterday he would include legislative proposals on health care in his State of the State address next week.
egudrais@projo.com / (401) 277-7045
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OTHER ASSEMBLY NEWS
Abortion foes rally at the State House: Sandra Benedict, above, of Coventry, with her daughter Ashley, 15, were among the protesters who call for the repeal of the 1973 Roe v. Wade decision and for tighter restrictions on abortion in Rhode Island. Page B2
Pencils, paper clips . . . it all adds up: Lawmakers propose a statewide program for buying school supplies, busing special- education students and purchasing insurance. Page B2
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JOURNAL PHOTO / GRETCHEN ERTL