PROVIDENCE – Rhode Island commercial health insurance enrollment shrank by 2,712 from December 2011 to December 2012, according to an annual report released by the R.I. Office of the Health Insurance Commissioner. The decline represents a return to the trend of declining private market enrollment that was interrupted by last year’s anomalous increase. Since 2005, the total privately insured population has declined by 10 percent.
Losses were concentrated in the small group employers with 50 or fewer employees market, which has shrunk by 28 percent since 2005. In the past year alone, this market saw a coverage decline of 8,051. The state’s three largest insurers, Blue Cross & Blue Shield of Rhode Island, UnitedHealthcare of New England and Tufts Health Plan, whose data are included in the report, all saw declines in small group membership.
The report suggests the decline may be caused by a declining state population, “perceived uncertainty and expense,” enrollment with carriers not listed in the report, or growth in other health insurance markets.
Between 2011 and 2012, the self-insured, full-insured large group, and individual markets did grow, though it was not enough to offset the decrease in small group market enrollment, resulting in an overall decline in the commercial market.
Over the past several years, the self-insured market has grown as large employers take on the risk of functioning as their own insurance companies instead of paying premiums directly to an insurer. The arrangement may allow for cost-savings: for example, employers can reap the benefits of lower employee health care costs.
Because large employers can spread the risk over a large population, they are more likely to adopt a self-insured arrangement than a small employer. Thus, between 2005 and 2012, the large group fully insured market declined by 66,232 lives while the self-insured market grew by 30,963.
The report points to a shift in the Rhode Island job market away from industries that traditionally offer benefits. Manufacturing, education and information lost 1,952 jobs between 2011 and 2012, while accommodation and food services, which often provide part-time work, gained 1,556 jobs.
The Affordable Care Act requires that all employers with more than 50 full-time employees provide these employees with health care beginning in 2015. This suggests that the self-insured and large group markets will continue to increase, in addition to the individual market, which will likely grow from its current 3 percent market share as more consumers purchase their own plans through the state health benefits exchange, HealthSourceRI.