If Blue Cross and Blue Shield of Massachusetts can keep increases in health plans for businesses to single-digits, why can’t insurers in Rhode Island do the same?
It’s a good question – one being asked by business owners throughout the state as they grapple with double-digit increases, in many cases increases in excess of 20 and 30 percent.
In the Bay State, Blue Cross announced last week that after several consecutive years of double-digit increases, it is holding its increase in average annual premiums to about 9 percent.
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The company’s CEO said the insurer’s bottom line is looking good and that it is time to pass those savings along to customers. In fact, cash reserves at Blue Cross and Blue Shield of Massachusetts have more than doubled since 1999, to $823 million.
Tufts Health Plan followed the Blue Cross announcement with one of its own, stating that its premium increases would be slightly lower than this past year.
This news from our neighbors to the north will only add to growing frustration of business owners in Rhode Island, many of whom received word last week that while their health insurance premiums were again soaring, health insurers here have never been financially stronger.
According to a report from the state Department of Health, profit margins for the state’s four health insurers averaged 4.3 percent in 2001, far exceeding the national average of less than 1 percent and the New England average of 2.2 percent.
Insurers in Rhode Island, according to the health department report, have also built up their cash reserves. For example, the average number of months a health plan could use its cash reserves to pay medical claims was 1.8 months in Rhode Island in 2001, compared with a national average of 1.2 months. Massachusetts, by comparison, comes in at the national average of 1.2 months, while in Connecticut, insurers could tap into their cash reserves for just .7 months.
In a lot of ways, the health department report sheds a rather positive light on health insurers in Rhode Island. It shows they are being run efficiently – specifically pointing out that they are spending less on administrative overhead.
But the report also raises a good question. When is enough, enough?
In recent years, employers have had to combat rising premiums by reducing the scope of health benefits they offer to employees. The cost of health benefits is now a motivating factor when a business owner is deciding whether to add employees – or reduce his or her work force.
The fact that our health insurers are financially strong is welcome news. But only when that strength can be transferred to the business community at large – in the form of more reasonable premium increases – will the state’s economy truly benefit. If it can happen in Massachusetts, it can happen here.
The health department report is entitled “The Health of Rhode Island’s Health Insurers.” It is posted in its entirety at www.health.state.ri.us.
