Skyrocketing health insurance rates, expensive government mandates and new taxes on insurance premiums – all these things play a role in fewer Rhode Island small businesses being able to afford health insurance coverage for their employees.
Recently, the R.I. Office of the Health Insurance Commissioner announced health insurance premium rate increases submitted by the state’s health insurers ranging from 14% to 29%. This comes on top of average increases in the small group (12.4%) and the large group (11.2%) last year.
Driving these increases, in part, are costly health insurance mandates and now a new “assessment” – basically a tax on health insurance premiums – will again further increase costs.
Legislation enacted in the closing days of this year’s General Assembly session that mandates certain health benefits be covered will only increase insurance costs for the people and companies who pay the bills.
For the past several years, the business community has expressed concerns about legislation like this because the costs are disproportionately borne by small employers, their employees and Rhode Islanders who purchase coverage through the individual market, who are often least able to afford premium increases.
The bottom line is that expensive mandates are making health insurance unaffordable for small businesses.
While we appreciate the desire to assist individuals facing difficult health challenges, we do not know the number of individuals who would be covered under all these new programs, the costs associated with the benefits and the other potential impacts.
Approaching health care and health insurance policy in a piecemeal fashion like this leads to increased costs for businesses and individual subscribers. For many years, the General Assembly has passed legislation adding mandated health insurance benefits that have increased the cost of individual, small- and large-group health insurance premiums.
We suggest that a different approach is needed.
The Rhode Island Business Coalition urges the General Assembly to create a process to review proposed mandated health benefits before taking action. This process would evaluate all the proposals and provide meaningful data to assist the General Assembly in its health care policy deliberations.
Making things worse is the Healthcare Services Funding Assessment established in this year’s recently passed state budget. This proposal is essentially a $30 million tax, every year, on health insurance premiums.
According to a March 2024 report from the Rhode Island Business Group on Health, the state already has the fourth-highest total state taxes, fees and assessments on commercial health insurance premiums.
It goes without saying that as health insurance costs continue to increase, many small businesses may decide to avoid the costs associated with health insurance altogether – or pass the increases on to their employees.
Overall, the health insurance landscape for Rhode Island businesses is grim – but it doesn’t have to be.
Moving forward, a more thoughtful approach to new mandates will reduce the pressure to increase health insurance premiums. In addition, while the Rhode Island Business Coalition opposes this new assessment, now that it is enacted, we believe it should go to its stated purpose to “support primary care and critical health care programs.”
Next year, we urge the General Assembly to step back, see the entire field and proceed in a thoughtful, measured manner, something that all Rhode Islanders would benefit from.
John C. Simmons is the president of the Rhode Island Business Coalition.
