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Ocean State Creates Basic Benefits Option

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Rhode Island Gov. Donald Carcieri has signed a bill, 2007-H6054aa, that will permit insurers to develop bare-bones health plans aimed at uninsured employers with 50 or fewer employees.

The newly signed bill, which amends Rhode Island’s Small Employer Health Insurance Availability Act, will exempt the new, bare-bones “basic benefit health plans” from most mandates other than those relating to mental health care, and it will permit insurers to limit benefits for services such as inpatient hospitalization and outpatient surgery.

The maximum annual deductible will be $2,000 for an individual and $4,000 for a family, according to the bill text.

The bill was sponsored by House Finance Committee Chairman Steven Costantino, D-Providence, R.I.

The total cost for coverage under a basic benefit health plan should be less than $3,000 per year for an individual and about $7,200 per year for a family, according to Rhode Island state officials.

About 40% of Rhode Island employees work for businesses with fewer than 50 employees, Costantino says.

Lawmakers consciously decided to use limits on benefits, rather than high deductibles, to hold down basic benefit plan costs, Costantino says.

Relying on high deductibles to hold down costs might have backfired, by discouraging younger, healthier people from enrolling, Costantino says.