December 24, 2012

Premium Premiums? RI Employers Paying Higher Than National Average For Employee Health Coverage

Monique Chartier

Business Wire reports.

When it comes to national average costs for health plans, Rhode Island employers are paying 13 percent more for employee single coverage and six percent more for employee family coverage, according to a study by USI Insurance Services’ (“USI”).

Lovely! Another item to add to our ... er, enticing business climate.

By the way, wasn't one of the purposes of the, it turns out, remarkably expensive health insurance exchanges mandated by ObamaCare supposed to be to lower health care costs by, among other things, bringing competition to each state? Yet a recent press release from Governor Chafee's office bragging on the state's health insurance exchange omits any mention of competition. Even more interesting, the author of the Business Wire article points to this somewhat baffling statement by the state's Office of Health Insurance Commissioner.

Slade said, “The Office of the Health Insurance Commissioner for Rhode Island has stated publicly that more competition won't help solve the cost problem which we find interesting given the fact that we have less competition here than almost any other market of comparable size and possibly the absolute worst average costs.”

A couple of questions pose themselves. First of all, why is Rhode Island spending many millions of tax dollars - our federal tax dollars now, our state tax dollars later - to create a health exchange when it apparently will not, after all, bring competition into the mix?

Secondly, why did the Office of the Insurance Commissioner say what they said? Do they not want competition? Are they diminishing the importance of that element because it is now clear that the health exchange will not confer it? Or are they acknowledging that it is, in fact, the excess regulations and requirements heaped upon the insurance industry in this state by the RI General Assembly that play a large role in the higher health insurance and health care costs in the state?

I'm starting to feel that we've been snookered by the hype that preceded the health insurance exchange. It'd be nice to get some honest answers about all of this.

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When I moved from Rhode Island to Hawaii 6 years ago my Blue Cross Blue Shield and Delta Dental dropped $100 per month in cost and there are multiple factors that coursed the rate drop.

Hawaii over 40 years ago was the first state in nation to institute total healthcare reform and as such all businesses in State of Hawaii must provide healthcare benefits to anyone working 20 or more hours a week and had the highest state-wide population in the nation covered by healthcare before the recession.

Gov. Mitt Romney (R) created Romneycare in Massachusetts and Romneycare is not tied to an individual’s employment so now State of Massachusetts has the highest state-wide population in the nation covered by healthcare (4.4% population uninsured) and Hawaii is now 2nd highest state-wide population covered by healthcare (8% population uninsured).

Also the annual Gallup-Healthways Well-Being Index® is the first-ever daily assessment of U.S. residents' health and well-being. By interviewing at least 1,000 U.S. adults every day, the Well-Being Index provides real-time measurement and insights needed to improve health, increase productivity, and lower healthcare costs. Public and private sector leaders use data on life evaluation, physical health, emotional health, healthy behavior, work environment, and basic access to develop and prioritize strategies to help their communities thrive and grow. Journalists, academics, and medical experts benefit from this unprecedented resource of health statistics and behavioral economic data to inform their research and reporting.

Insurance companies could also be using Well-Being Index® ranking to set insurance rates in each state.

Hawaii is ranked #1 in nation on Gallup-Healthways Well-Being Index®, Massachusetts is ranked #14 on the Well-Being Index® and Rhode Island is ranked #35 on the Well-Being Index® out of 50 states.

Posted by: KenW at December 24, 2012 4:25 PM

Here's an article from Yahoo on the best/worst run states. Anybody care to guess before clicking the link?

Posted by: ANTHONY at December 25, 2012 7:24 PM

"I waited to collect my State of RI retirement till I turned age 65. My retirement income is $1,084.00 a month with $987.66 net after RI and federal taxes per month."

Hi Ken,
Sorry for hijacking another thread but if you recall this comment really puzzled me the other day. It's a violation of 4 USC 114 for the state to tax your pension if you reside elsewhere. You might want to look into that further.

Posted by: Max D at December 25, 2012 10:12 PM

Max D,

Are you indicating State of Rhode Island is wrong writing a law that says if you do not reside in the State of Rhode Island but derive income from within the State of Rhode Island you must pay Rhode Island state income tax on that income via a RI1040NR (non-resident) form? Per definitions retirement income was included on the form. I’ve had 5 individual tax accountants go over this and they all came back saying I had to pay!

Posted by: KenW at December 26, 2012 6:18 PM


I asked a CPA with a Masters in Taxation. I looked up the statute after talking to him. I certainly can't explain why someone may have told you something different but it might be worth following up on.

Posted by: Max D at December 26, 2012 8:13 PM

Max D,

I looked at 4 USC 114 and the basic definitions of a pension (but not all the referenced subsections yet).

I have the 2011 Rhode Island instructions for filling out RI1040NR and nowhere does RI say pension but RI does exempt annuities consistent with 4 USC 1144.

In RI case it is a play on words what is said and not said or implied.

4 USC 114 does say; “(a) No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State (as determined under the laws of such State).

“(As determined under the laws of such State)” makes a very big legal statement within the law.

Posted by: KenW at December 27, 2012 12:40 AM

He said there's case law but I didn't ask him to cite it.

Posted by: Max D at December 27, 2012 5:40 AM

I would laugh my ass off if Ken has been paying extra taxes to Rhode Island every year. It sounds like he has been.

Posted by: Dan at December 27, 2012 10:02 AM

@Max D,

The case law I referred to was related to Hawaii Police Union suing State of Hawaii for not depositing state funds into the pension system creating an unfunded liability. Hawaii Police Union won in court and it was upheld all the way up to Hawaii Supreme Court.


I’ve been paying RI income tax per my tax accountant’s directions. I’ve 5 different tax accountant review if I had to pay or not pay RI income tax as a nonresident and they all have indicated the way RI law is written I have to pay.

What I do pay is less than what I would spend taking one of my girlfriends out to dinner and shopping for an evening. It’s chump change and doesn’t even pay the salary of a person in RI or the paper and postage to send me my monthly paper statement.

Posted by: KenW at December 27, 2012 5:12 PM
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