Smart Benefits: RI's Healthcare Rate Increases for 2013

Smart Benefits: RI's Healthcare Rate Increases for 2013

January is fast approaching, and that’s when most employers renew healthcare coverage. But while national average premium increases are projected to be between 5-7% for 2013, Rhode Island is likely to fare better. That’s because, last week, RI Health Insurance Commissioner Christopher Kohler announced his final decision on the 2013 rate factors submitted by area insurers. The result? Employers in the state will see average expected premium increases in the range of 1.65% to 5.53% depending, in part, on whether an employer is classified as a small or large employer.

Small employers can expect an average rate increase of 1.65% from BCBSRI, 2.54% from UnitedHealthcare, and 5.30% from Tufts Health Plan.

Large employers can expect 3.98% from BCBSRI, 4.5% from Tufts Health Plan and 5.53% from UnitedHealthcare.

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These rate increases are just averages. Factors like employer demographic changes, whether  medical claims experience is used to underwrite the group, and product and plan design will influence an employer’s specific rates.

Increases as Expected

Kohler was stringent with his initial directive that carriers submit increases no higher than 4%, citing strong and vocal feedback from Rhode Island employers who sought relief from unsustainable health insurance costs. His decision last week confirms that he’s continuing the pressure on insurers to better manage medical expenses and administrative costs – and keep profits in check.

Insurers Need to Take Responsibility

Medical expenses are a big contributor to premium costs – and inpatient hospital care is a key driver in this state. It’s up to the insurers to keep expenses in check with the hospital systems. That means new provider payment arrangements that seek to improve patient outcomes, control system costs and reward for system improvement. While carrier-hospital negotiations over these issues can be strained, the bottom line is that if providers want to be paid certain rates, they’ll need to demonstrate performance to support them.

With carriers reducing their profits and administrative expenses – or at least holding them flat – the only place to continue to impact costs is where they’re rising the most. Let’s hope the hospitals respond to the challenge so that Rhode Island’s low premium increases this year aren’t the last.

Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.

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