HEALTH INSURANCE

R.I. employers pay more for health insurance than U.S. average

ACCORDING TO A USI INSURANCE SERVICES study, Rhode Island employers pay more for health insurance than the national average.
Posted 12/24/12

BRIAR CLIFF MANOR, N.Y. – Rhode Island employers pay more for employee health insurance than the national average in spite of a slowdown in the annual rate of increase, according to a study by USI Insurance Services.

The 2012 Rhode Island Employer-Sponsored Health & Welfare Benefits Study – the 11th annual version of the survey – also found that two companies, UnitedHealthcare of New England and Blue Cross & Blue Shield of Rhode Island, account for 97 percent of the survey respondents’ membership.

The 2012 survey was distributed to more than 300 Rhode Island employers. Data was then compiled, recorded and reviewed to ensure accuracy.

“Despite paying higher health care costs than the national average, Rhode Island employers reported health care benefit costs increased an average of 5 percent in 2012, which is an improvement from the increases respondents experienced in 2011 and 2010, 8 percent and 10 percent respectively,” said the USI report.

The report added that small employers tend to have lower costs than large employers, with an average cost per employee of $10,588 versus $13,295 for large employers.

“We are seeing a significant reduction of trend levels both nationally and locally,” Samuel Slade, employee benefits practice president for USI New England, said in a statement. “Whether this is a short-term phenomenon due to the economic malaise, higher cost shifting to employees through plan design or healthier behaviors remains to be seen.”

“For employers who are self funded, this is nothing but good news. For employers who are fully insured, it is important to work aggressively to make sure that a mid-single digit trend is not merely being converted into increased for-profit or nonprofit insurance company margins or reserves,” added Slade. “Many employers, having done the retrospective math on their own claims costs, realize they would have been infinitely better off to have self funded their medical costs during the last 12 months.”

The USI study also found that cost shifting to employees has become more prevalent as employees deal with increasing health care costs. Within the last year, 28 percent of employers surveyed said they changed their employee benefits plans and 38 percent increased employee contributions. Also, in “an effort engage employees in healthier behaviors and lifestyles,” 70 percent of survey respondents use incentives to encourage participation in wellness programs.

According to a USI release, these statistics reinforce what industry stakeholders are doing to address the changing health care environment. “Brokerage firms need to diversify, be more consultative in their approach and look at other areas in a client’s portfolio where they can provide value-added services,” said the release, adding: “For small, independent brokers with weak resources, poor support systems and limited market leverage, this is a new frontier of which many won’t survive.”

Of the 300 employers surveyed by USI, only 3 percent claimed they are “likely” or “very likely” to drop coverage once the Rhode Island insurance exchange goes into effect in 2014.

According to Slade, many employers are taking a “wait and see” attitude and 27 percent reported that they did not yet know what they would do.

“The Office of the Health Insurance Commissioner for Rhode Island has stated publicly that more competition won’t help solve the cost problem, which we find interesting given the fact that we have less competition here than almost any other market of comparable size and possibly the absolute worst average costs,” said Slade.

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