Human Capital & Careers

R.I. Law Eyes Benefit-Cost Cuts

The new health-care law envisions "a new, more affordable insurance product for small businesses."
David KatzJuly 10, 2006

Following on the heels of Massachusetts, Rhode Island last week enacted a wide-ranging health-benefits law aimed at making medical coverage more affordable for small businesses and individuals. Among the features of the new law of particular interest to employers: a plan to develop cheaper insurance for small business and the creation of a reinsurance pool aimed at cutting premiums by 10 percent.

The new law empowers Rhode Island’s health insurance commissioner to work with health insurers to put together “a new, more affordable insurance product for small businesses,” according to Gov. Donald Carcieri. The plan should cut premium costs for small businesses that take part by up to 25 percent, he said.

The new benefit plan would be available to businesses with 50 or fewer employees and individuals who buy coverage directly. Designed to promote health and wellness, the plan will be offered at target cost of 90 percent of a standard plan premium. For insurance bought directly by individuals, the target cost would be no more than 10 percent of the total statewide average wage.

While the law creates a reinsurance pool aimed at curbing health care premium costs for small businesses by an added 10 percent, the pool lacks money. Protests by insurers sunk a funding plan floated in the state’s General Assembly that would have financed the reinsurance pool via a tax on the state’s two largest health insurers, according to the Providence Journal.

Still, Carcieri contends, the reinsurance plan is now established in state law and provides a launching pad for future funding legislation. The health reinsurance program, which would also back coverage for high-risk individuals, would support health insurance for small businesses with average wages that rank in the bottom quartile of all Rhode Island employers. In order to take advantage of the lower premiums, employers would also have to shell out a minimum of 50 percent of single-coverage premiums for their eligible employees.

The new law also bans junk food in school vending machines and requires health insurers to cover smoking-cessation treatment.

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