USI Survey Reveals Rhode Island Employers Still Paying More for Employee Health Insurance than National Average Despite Slow Down in Annual Rate of Increase

Higher Incidence of Insured Versus Self Funded Plans Cited as a Factor

BRIARCLIFF MANOR, N.Y.--()--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”). The 11th Annual 2012 Rhode Island Employer-Sponsored Health & Welfare Benefits Survey also found that two companies, United Healthcare and Blue Cross Blue Shield of RI, account for 97 percent of the survey respondents’ membership.

Despite paying higher healthcare costs than the national average, Rhode Island employers reported healthcare benefit costs increased an average of 5% in 2012, which is an improvement from the increases respondents experienced in 2011 and 2010, 8% and 10% respectively. Small employers tend to have lower costs than large employers with an average cost per employee of $10,588 versus $13,295 for large employers.

Samuel Slade, employee benefits practice president for USI New England, said, “We are seeing a significant reduction of trend levels both nationally and locally. Whether this is a short term phenomenon due to the economic malaise, higher cost shifting to employees through plan design or healthier behaviors remains to be seen. For employers who are self funded, this is nothing but good news. For employers who are fully insured, it is important to work aggressively to make sure that mid single digit trend is not merely being converted into increased for profit or nonprofit insurance company margins or reserves. Many employers, having done the retrospective math on their own claims costs realize they would have been infinitely better off to have self funded their medical costs during the last 12 months.”

Additional findings in the USI study indicate that cost shifting to employees has become more prevalent as employers deal with increasing healthcare costs. Within the last 12 months, almost one-third (28 percent) said they changed their employee benefits plans and 38 percent increased employee contributions. In an effort to engage employees in healthier behaviors and lifestyles, over two-thirds of respondents (70%) use incentives to encourage participation in programs. The study also shows that employers who utilize an employee contribution incentive for wellness participation had the highest average participation rate at 52 percent.

These statistics reinforce what key stakeholders are doing to address the changing healthcare environment. Brokerage firms need to diversify, be more consultative in their approach and look at other areas in a client’s portfolio where they can provide value-added services. For small, independent brokers with weak resources, poor support systems and limited market leverage, this is a new frontier of which many won’t survive.

Michael Turpin, executive vice president of employee benefits at USI’s corporate headquarters in Briarcliff, Manor, NY, said, “Health reform is advancing at an uneven but relentless pace toward its goal of ensuring coverage for all. Public and private exchanges, mandatory minimum loss ratios and economic pressure to reduce non health related costs has already been taking its toll on traditional intermediaries – insurance agents and small independent brokers – who are seeing remuneration reduced and client demand for compliance, technical, communications and clinical expertise increase. As healthcare purchasing splinters into multiple distribution channels and remuneration becomes transparent and more directly tied to outcomes and value, we expect to see agency consolidations and a reduced field of advisors.”

For those employers surveyed by USI, only three percent claim they are “likely” or “very likely” to drop coverage once the Rhode Island insurance exchange becomes available in 2014. Many employers are taking a wait and see attitude, and 27 percent indicated that they do not know yet what they will do. 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.”

While 22 percent of Rhode Island employers reported a “grandfather” status on their health plans, only six percent expect to remain grandfathered in 2013. This is a stark contrast to the Department of Health and Human Services’ prediction that 34 to 55 percent of employers would remain grandfathered in 2013. Patrick Canavan, senior vice president, employee benefits for USI New England, said, “For the mid-market broker, staying ahead is much more than marketing health insurers for a quote. Being able to present a broad and deep set of measurable employee benefits solutions that will help your clients attract talent, improve employee retention and grow their earnings is what will differentiate you. In this new era of health reform, if you don’t have the capabilities to present an agnostic review of all the options available and then back it up with custom solutions and superior service that yield meaningful results, the client will find someone else who does.”

Survey Methodology

The 2012 Rhode Island Area Health & Welfare Benefits Survey was distributed to over 300 employers doing business in the Rhode Island area. Data was compiled and recorded and reviewed to ensure accuracy. All individual responses are treated with strict confidentiality.

Media inquiries: For a copy of the 2012 Rhode Island Employer-Sponsored Health & Welfare Benefits Survey, contact Cecile Locurto at

About USI Insurance Services

Founded in 1994, USI is a leading distributor of property and casualty insurance, employee benefits and specialty products throughout the United States. Headquartered in Briarcliff Manor, NY, the Company operates out of nearly 100 offices in 26 states. As the third largest privately-held insurance broker in the nation, USI combines its client-centric culture at the local level with leading edge technical resources on the national level. Visit for more information.


USI Insurance Services
Cecile M. Locurto, 914-747-6331


USI Insurance Services
Cecile M. Locurto, 914-747-6331