Posted May. 5, 2008
PROVIDENCE – UnitedHealthcare of New England last week sweetened the deal it has been offering municipalities and school districts by adding extra discounts if more of them buy into the state contract.
The state’s contract with United, which covers state employees, retirees and their dependents, includes a clause that allows municipalities and school districts to get the same deal that the state gets for administering everyone’s health benefits.
But while some have considered the possibility of taking that deal, so far none has – at least in part because of resistance from the unions whose members would be affected.
Last Monday, in a new bid for the City of Providence, which has been negotiating with the insurer for some time, United offered a pricing model that sets five pricing tiers based on how many entities switch to United.
Currently, the state pays the first-tier rate. If the City of Providence and Providence School Department move to United, the state would save about $500,000, and the city’s and schools’ rates also would drop, according to a news release from Gov. Donald L. Carcieri’s office.
If the City of Warwick and the Warwick schools, the City of Cranston and the Cranston schools move to United, everyone will get the third-tier price, and the rates would drop even more if additional municipalities and school districts joined in.
“When we put the state health insurance contract out to bid, we asked that the winning company agree to allow Rhode Island cities and towns to take advantage of the lower administrative rates the state was able to command,” Carcieri said. “I wanted local communities to benefit directly from the state’s bargaining power. Unfortunately, a number of cities and towns have passed on this opportunity to save money for their taxpayers.”
Carcieri applauded United’s new proposal as particularly helpful at a time when the state and the municipalities are facing financial difficulties.
“This pricing is beneficial to local property taxpayers,” Carcieri said. “As more communities join with the state, UnitedHealthcare will provide lower rates to all of us. As everyone struggles to resolve state and local budget concerns, this is an opportunity that no one should pass up, unless they can get a lower rate elsewhere.”
In the news release, United CEO Stephen J. Farrell said the insurer had been “working to find ways to help with state and municipal budget issues,” and by getting creative, it has come up with this “innovative proposal” that combines the buying power of the state and the cities and towns.
UnitedHealthcare of New England is a division of UnitedHealth Group (NYSE:UNH), a diversified health and well-being company based in Minneapolis, Minn. Additional information is available at www.uhc.com.
