R.I. Governor Promises $100M to Help Small Firms Provide Health Benefits

February 9, 2006

Rhode Island Gov. Don Carcieri introduced plansthis week to set up a $100 million trust fund to help small businesses provide affordable health care to employees.

He is also seeking a $20 million bond to develop a real-time patient health information system that would reduce health care costs by eliminating duplicated tests and procedures.

Using the clout the state has with health insurance companies, Health Insurance Commissioner Chris Koller said the state would be able to negotiate for more affordable health plans for small businesses.

By investing $100 million in a trust fund, Koller said the government would fund the new plan, called SelectCare, with $5 million to $7 million interest generated annually. The money is part of funds the government would obtain from selling its rights to future settlement payments from tobacco companies. In addition, the trust fund would be supplemented by fees levied on health insurers that generate excess profits or incur additional administrative costs. This would bring in another $5 million to $10 million each year, Koller said.

Carcieri said the rising cost of health care is the number one issue on people’s minds today and a national issue that would take time to be addressed. With SelectCare, Carcieri said, he hopes he can reduce premium costs for employees of small businesses by 20 percent or more, and cut the increasing number of those who are uninsured in the state.

About 11.4 percent of Rhode Islanders are currently uninsured, compared with 6 percent four years ago, Koller said.

Koller said the government has chosen to focus on small businesses because of statistics: 98 percent of businesses with 100 or more employees offer health insurance, compared with only two-thirds of businesses with 10 or fewer employees.

“Small businesses are vitally important for our state, and they have been hit the hardest by such dramatic increases in health insurance premiums,” Carcieri said.

The funds would provide relief for low-wage small businesses, defined as those that have 50 or fewer employees. Money in the trust fund would help reduce the health insurers’ exposure to risk, which would allow the health insurance companies to offer a lower premium to the businesses.

Jeanne Gattegno, president of the Rhode Island Community Action Partnership Agency Association, said Carcieri’s new plan is a good idea if he is able to put together the trust fund without sacrificing other social service programs and affordable housing.

“If it is at the cost of other programs and development of affordable housing, then they would just be playing a shell game,” she said.

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