R.I. Governor Fears Job Slowdown as Firms Drop Health Coverage

November 21, 2005

Health costs are rising for Rhode Island companies, forcing some to drop coverage for employees or charge more to provide the coverage, according to a new survey.

The survey also found employees most affected are those working for small employers and those who are paid relatively low wages.

The survey was done this year, based on responses from 1,444 employers. The results, while preliminary, were compared to a similar survey done in 1999, according to Christopher Koller, the state health insurance commissioner. A final report is expected to be completed before the end of the year, he said.

Gov. Don Carcieri said the situation “is becoming a significant obstacle to economic development and to job growth in the Ocean State.”

The latest study found that nearly half of employers reported health-insurance cost increases of more than 20 percent per year for the last three years. About one in five said costs went up 26 percent or more per year.

It also shows the proportion of the state’s population without health insurance rose from 6.2 percent to 11.4 percent, between 2000 and 2004.

The study, done for the state by JSI Research and Training Institute, found 71 percent of low-wage employers offer insurance compared with 99 percent of other employers. “Low-wage” employers are classified as those who pay more than half their workers $21,000 per year or less.

The survey found that:

The proportion of employers offering health insurance dropped from 79 percent in 1999 to 75 percent this year. For full-time employees, the rate dropped from 92 percent to 87 percent.

In 1999, 61 percent of employers paid the full premium for individual coverage, compared to 21 percent now.

More companies offer only high-deductible plans, with 20 percent imposing deductibles greater than $1,000 for individual coverage.

Since 1999, the percentage of full-time employees eligible for coverage, at companies where coverage is offered, fell from 92 percent to 80 percent.

More than half of the respondents said health-care costs were reducing their profits. Nearly 40 percent said they reduced or eliminated pay raises and 27 percent said they considered raising prices.

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