RIPEC analyzes Raimondo’s proposed health insurance assessment to fund HSRI

PROVIDENCE – The Rhode Island Public Expenditure Council has released an analysis of Gov. Gina M. Raimondo’s proposed health insurance premium assessment to fund HealthSource RI, which would generate $11.2 million in revenue in fiscal 2017.

The nonprofit RIPEC said that in comparison, the federal assessment that is collected in states utilizing the federally facilitated marketplace would provide $8.6 million if it were implemented in Rhode Island.

Raimondo has proposed the assessment as part of her fiscal 2016 budget; it would affect individuals and small businesses that use the exchange.
According to data provided by HSRI, the assessments would add a 3.76 percent surcharge to premiums of all health plans purchased in Rhode Island by individuals and a 1 percent surcharge to premiums of all health plans purchased by small employers.

“The governor’s proposed assessment is intended to be similar to the federal assessment that is collected in states currently utilizing the FFM,” the RIPEC report states.
The $11.2 million in revenue is based on assessing 3.76 percent on the total premium of $190 million for the individual market and 1.05 percent on the total premium of $381 million for the small group market in fiscal 2017. Using the same premium figures, the FFM assessment levies 2.9 percent on individuals and 0.81 percent on the small group market to arrive at the $8.6 million figure.

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While the exchange has been provided with $152.5 million in federal funds for its operation, it has to be financially self-supporting. The exchange received a temporary extension to continue to use federal funds through the end of 2015, though it cannot use those funds for operating expenses. That’s why Raimondo is proposing the assessment in her budget to fund the exchange.

The report states that the federal Affordable Care Act provided states the flexibility to determine whether they would operate a state-based exchange, join the federally-facilitated marketplace operated by the federal Department of Health and Human Services or form regional or partnership marketplaces.
Rhode Island’s state-based health insurance marketplace was established four years ago, and as of Feb. 23, 30,001 individuals have health insurance through the exchange and an additional 3,282 lives have been covered through 454 small businesses on the exchange.

In fiscal 2017, HSRI is projecting exchange enrollment for individuals will total 34,724 covered lives with an average annual premium of $4,558 for a total premium of $158 million. HSRI also projects there will be 14,515 covered lives through the SHOP program
with an average annual premium of $6,085 for a total premium of $88 million.
The total combined premium for all plans purchased through the exchange is projected to be $246.6 million.

The report also said the state has three policy options going forward regarding the exchange: Retaining HSRI by authorizing funding that would allow it to continue operations, to transition to the FFM and not authorize funding for HSRI and move forward on “parallel tracks” where funding is temporarily authorized for HSHR while a transition plan for the FFM is under way.

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