Learning from Rhode Island’s Long Trend of Health Insurance Burdens

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To some extent, Rhode Island has been immune to the cost increases against which so many Affordable Care Act (ACA) skeptics have rightly warned since the act became law in 2010. The state had already freely opted to inflict on its people most of the harm that Obamacare has brought to other states. The increases are starting to catch up with Rhode Island health insurance consumers, nonetheless, and in ways that aren’t captured by just comparing premiums.

The Ocean State has long led the nation in the number of health insurance mandates, driving up costs. Limits on rate variation for people in different groups were already in place. The expansion of eligibility rules for Medicaid was of less import in Rhode Island because the only change left to make was to offer benefits to able-bodied adults without children.

Even the danger of scaring off insurers wasn’t much of an issue, because Rhode Island’s burdensome regulations had made the state a near monopoly for Blue Cross Blue Shield until UnitedHealth won a state government contract, making it effectively a two-company market.

As the Rhode Island Association of Health Underwriters put it, in 2004, “Over the past few years, a number of private health insurance carriers have left the state. This has severely limited the number of health insurance product choices residents and business owners in Rhode Island have, and it has also caused a dramatic rise in health plan costs, which even exceed the high health insurance rate jumps that people in other states have experienced.”

Although other states have done some catching up with the ACA, Obamacare and Rhode Island’s health benefits exchange, HealthSource RI, have not succeeded in lowering costs. As a silver lining, though, the experience may be teaching Rhode Islanders the financials of health insurance — mainly that premiums aren’t the only way for insurance to cost more.

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