The cost of one year of medical coverage for workers in Rhode Island rose 7 percent in 2002 to an average of $6,398, making Rhode Island one of the most expensive states in the nation for health coverage, according to a new survey.
When health plans for employees of the state of Rhode Island are removed from the survey, the average total gross costs of medical coverage per employee per year is $6,168 – a 3 percent rise from a year earlier, according to the study. Workers employed by the state of Rhode Island do not contribute to the cost of their health care coverage, and the state plans have significantly higher average costs as a result.
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Overall, group medical costs for Rhode Island employers have increased by an average of 46 percent over the last three years, according to the Rhode Island Area Employer-Sponsored Medical & Dental Benefits Survey, conducted by Bluff Head Enterprises, an employee benefits consulting firm in Wakefield.
“Two areas in the study are really made for creating headlines – our costs are higher than regional and national averages, and yet what we charge our employees is lower. And the state versus non-state employee difference – state employees don’t pay,” said Samuel B. Slade, president of Bluff Head Enterprises.
Employers across the nation are struggling with the spiraling cost of health care. Nationally, last year the cost of health benefits rose 14.7 percent, the sharpest increase in over a decade, according to Mercer National Survey of Employer-Sponsored Health Plans 2002. Employer share of health benefit costs could top $10,000 per employee by 2009, according to a report released in May by HR Benchmarks, an industry journal.
But the problem is especially serious in Rhode Island, where employers pay more for coverage and charge their employees less than their regional and national competitors, the Bluff Head report found.
Rhode Island employers’ average HMO costs were 22 percent higher than the national average last year, and 20 percent higher than the Northeast region average. Similarly, the Rhode Island employers’ average PPO rates were 17 percent higher than the national average and 12 percent higher than the Northeast region average last year, according to the survey.
By industry, finance and insurance companies in Rhode Island had the lowest average cost of health insurance per employee, at $5,313. Public schools and other state departments had the highest costs of health insurance per employee last year, at $8,423.
Employee contributions vary widely locally, regionally and nationally. But in every case, Rhode Island employee contributions for nearly all types of health plans and levels of coverage were below national and regional averages last year, according to the survey.
Fifty-four Rhode Island employers participated in the survey, reflecting 42,800 employees in the state. Of those companies, 44 are privately held businesses, eight are public companies and two are Rhode Island state government agencies.
Ninety-eight percent of respondents to the survey said they believe that the lack of competitive carriers offering group health insurance in Rhode Island is a major factor contributing to rising health care costs in our state. The vast majority – 90 percent of respondents – said they thought the cost of group health insurance in Rhode Island would be lower if the state had more group health insurers competing in the local marketplace.
“Compiling benchmarking data is now an annual event for every employer. It’s
necessary, when you’re seeing costs rise 15 percent or so every year,” said
Slade.
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