R.I. reinsurance program lowers individual health insurance rates

FEDERAL approval of a state reinsurance program has lowered 2020 individual health insurance rates in Rhode Island.
FEDERAL approval of a state reinsurance program has lowered 2020 individual health insurance rates in Rhode Island.

PROVIDENCE – A new state program has earned federal approval, paving the way for savings on health insurance premiums for some consumers.

The health insurance reinsurance program, submitted in July by Rhode Island to the Centers for Medicare and Medicaid Services, was approved by the U.S. Department of Health and Human Services last week. The reinsurance initiative, to be administered by the state based on a federal waiver to current operating procedure, will be effective from 2020 through 2024. Savings will be produced on tax credits related to health care coverage.

Among other sources of revenue to fund the reinsurance program are penalties paid by those in violation of Rhode Island’s individual mandate that requires health insurance coverage. Funding for the program is estimated to total $14.7 million, with $8.3 million from the state and $6.4 million from federal savings. The figures, however, are likely to change following federal government calculations due later this year.

As a result of the program, Blue Cross & Blue Shield of Rhode Island, which filed for a 6.9% increase in individual market insurance coverage for next year, instead reduced rates by 1.5% for 2020. According to the R.I. Office of the Health Insurance Commissioner, BCBSRI’s individual market rates increased 7.5% for 2019 and 12.1% in 2018.

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Neighborhood Health Plan of Rhode Island will institute a 0.2 % decrease for the year for the individual market. The company had originally requested a 5.4% increase. Neighborhood’s rates rose 8.7% for 2019 and 5% in 2018.

The average Rhode Islander on the individual market is expected to spend less on premiums in 2020 than in 2019, according to Gov. Gina M. Raimondo’s office.

“Our objective is two-fold; we want to make health insurance as affordable as possible and have as many people covered as possible,” said Cory King, spokesman for OHIC.

The program, a first for Rhode Island, “identifies a level of risk that the state will cover for the insurance company … so the insurance can lower their premiums,” King said. “The state is taking some of the really high-cost claims off of the insurance companies.”

A committee made up of insurance industry representatives and consumer advocate groups had recommended the creation of a reinsurance program, along with other suggestions on stabilizing the individual market, ahead of the state’s submission for the reinsurance waiver, King added.

Elizabeth Graham is a PBN staff writer. Email her at Graham@PBN.com.

A previous version of this story provided an inaccurate rate change for Neighborhood Health Plan of Rhode Island individual health insurance plans.

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