Rhode Island Legislators Get Health Insurance Stipend

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A new Rhode Island law may give the state's legislators a real advantage over their constituents when it comes to health insurance.

The measure, sponsored by state Rep. Lisa Baldelli-Hunt (D-Woonsocket), took effect July 1. It gives legislators $7,000 per year for the purchase of health insurance--and they get to keep whatever part of the stipend they don't spend on health insurance.

Critics say the law is evidence legislators are more interested in giving themselves an increase in benefits than in saving taxpayers money or improving the cost and efficiency of the state's health insurance system.

Generous Benefits

The new law, introduced as H 8330, makes legislators eligible to purchase individual health insurance "at the same price, terms and conditions as the state purchases for its full-time state employees." A government-appointed committee will meet each year to review the plan and determine whether an increase in the $7,000 allowance is necessary to compensate for rising insurance costs.

"The stated intent is to provide an amount sufficient to buy single insurance," said Roland Benjamin, vice president of LFI, Inc., a Rhode Island-based medical corporation. "But this is a reach, in that traditional plans can be purchased for around $5,500 and higher deductible plans enabling HSA contributions can be purchased for $3,500."

Lining Legislators' Pockets?

Opponents are quick to point out members of the state's General Assembly are already provided health benefits comparable to those of state employees. And they take issue with the provision allowing legislators to keep all of the stipend, regardless of how much their insurance costs.

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"[Legislators] could buy a $2,850 deductible plan for $3,500, take $2,850 and put it in an HSA, and pocket the other $650 left from the $7,000 sum," said Benjamin. "I guess the upside would be that they are given an incentive to engage in consumer-driven health care, but I'd bet most would be too complacent.

"It is not really a health care issue, as the General Assembly members number 113 total, with several on other plans anyway," Benjamin added. "The Baldelli-Hunt legislation appears to be an end-around to increase the buyback [stipend] amount. If nothing else, it makes General Assembly candidacy a little more appealing to those already covered by the state plans through their employment or their spouse."

'Misused Taxpayer Funds'

William Felkner, president of the Ocean State Policy Research Institute, says the new law is a misuse of taxpayer funds.

"I would say that if the representative [Baldelli-Hunt] was sincere in saving the state money, she would simply propose a 50 percent co-pay for insurance--or eliminate the perk altogether," Felkner said. "Her proposal leaves the door open for an increase in the amount of money received with a buyback. Considering the large number of legislators who are union members, it is likely that they are covered by their employer and would opt to take the larger buyback."

Once implemented, H 8330 could cost the taxpayers of Rhode Island up to $2 million, according to experts.

"If the benefit is eliminated altogether, it might save the state something well south of $2 million, but the likelihood of that happening is slim at best," Benjamin concluded.

Krystle Russin ([email protected]) writes from Texas.

For more information ...

Rhode Island House Bill 8330 (PDF)

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