Although RIte Share was launched last year, hundreds of Rhode Island businesses soon might get their first taste of the insurance-subsidy program – and business leaders fret that it will strain companies already stretched thin from a recession and soaring health-care costs.
The state’s Department of Human Services this month is embarking on a fresh approach to jump-start the nascent RIte Share program, which began early last year to help crimp the flow of new enrollees into RIte Care, the state health-insurance program for low- and middle-income families.
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The primary change: Instead of eliciting cooperation from employers, DHS now will ask employees to take a more active role in moving out of RIte Care and into their employer’s health plan. RIte Share will, in some instances, pay employees directly for their portion of employer-sponsored health premiums, although in other cases the program will continue to reimburse employers.
The move was made because DHS’s initial employer-driven approach – whereby companies work directly with DHS to transition employees from RIte Care to company health plans – hasn’t worked. Fewer than 250 workers participated in the RIte Share program last year, far short of the initial goal of 2,500.
"The change is being made because the state mandates employee participation, but it can’t mandate employer participation," said new DHS Director Jane A. Hayward. "If an employer doesn’t want to participate, we don’t have any choice but to pay the employee directly."
Hayward, who replaced former director Christine Ferguson in November when Ferguson resigned to run for Congress, said the new procedures already are in the works and will begin "in earnest" during the latter half of January.
RIte Share’s purpose is to move people off RIte Care’s swelling rolls and into the health plans of private employers. The state pays the employee’s share of premiums under his or her company’s health plan, provided it’s cheaper than having that person remain in RIte Care.
But RIte Share is only a partial solution to help relieve a RIte Care system that is bursting at the seams, with 115,000 recipients and a 2002 budget of $235 million in state and federal funding. Only an estimated 7,000 of those recipients are employed, and therefore might be eligible to join an employer’s health plan.
Hayward said the state would like to move as many of those people as possible out of RIte Care, with the goal of saving as much as $6 million by 2003.
The RIte Share program emphasizes that the "employer contribution to the cost of coverage remains unchanged." But the problem for businesses is that tey haven’t been paying anything toward health benefits for these workers; the state has been picking up the whole tab. Now, businesses are forced to add them to their health plans, and most companies are likely to pick up at least 60 percent of those premiums.
Sidney I. Goldman, president of Cranston-based Greylawn Foods Inc., estimates that six of his 45 employees are RIte Share-eligible and might eventually transition to the company’s plan. Greylawn pays 100 percent of each individual employee’s health premiums, which costs about $3,000 annually. By adding six employees, "That’s an $18,000 hit," Goldman said.
Hayward acknowledges that RIte Share is going to drive up costs for some businesses, but said the impact should be mild because those 7,000 RIte Share-eligible workers are spread out over 4,500 employers.
"We appreciate the concerns about (extra costs), but we’re not talking about a lot on any one business," she said. "The expense to them should really be minimal."
But some business leaders don’t see it that way.
Thomas J. Rossi, general manager of the Providence-based Manufacturing Jewelers and Suppliers of America, said that even adding a couple of employees to a company’s health plan can be painful financially – especially during a recession. Rossi is on a 20-member RIte Share advisory committee composed of representatives from the state’s chambers of commerce, trade associations and other business groups.
"Most of these businesses don’t know which of their employees are on RIte Care – nobody ever told them," said Rossi, whose national trade association, MJSA, represents hundreds of Rhode Island manufacturers. "Now they’ll have employees coming in and saying ‘Oh by the way, I’m on RIte Share now, and you’re going to pay for 60 percent of my family plan.’"
While Rossi said the advisory committee isn’t trying to fight the RIte Share program, he said there is no sugarcoating its potential cost burden on small businesses. One MJSA member, independent jewelry manufacturer with a staff of 12, faces the cost of adding two employees to its health plan, at about $4,000 to $5,000 each, he said.
"That’s a lot of money for a small company to absorb," Rossi said. He added that the state’s manufacturing and hospitality industries could be hit hardest, because they employ a lopsided share of the state’s low-income workers.
Dale Venturini, president of the Rhode Island Hospitality and Tourism Association, said compliance with RIte Share – when combined with skyrocketing health-care costs and the devastating effects that Sept. 11th has had on the tourism industry – could affect many of the group’s members.
"My biggest fear is we might see people offering lesser plans and higher co-pays," Venturini said.
Despite RIte Care’s new strategy of reimbursing employees directly, the program will continue to work directly with employers to help move RIte Care recipients into company health plans, Hayward said.
Hayward maintains that the employment community’s lackluster response to RIte Share thus far has been less a product of resistance than of ambivalence.
"A lot of employers still don’t understand what (RIte Share) is," Hayward said.
Rossi agrees that a lack of awareness is a big problem.
"People barely understood RIte Care," Rossi said. "Now you have the problem of employers thinking that RIte Care and RIte Share are the same thing."
