Rhode Island is the second state to attempt to limit how much healthcare costs can increase each year by establishing a target or benchmark.  Massachusetts implemented a benchmark in 2012.  Delaware is expected to follow suit later this year.

On February 6, 2019, Rhode Island Governor Gina Raimondo signed an executive order establishing an annual growth target of 3.2 percent on healthcare spending by consumers and insurers through 2022.  The “Rhode Island Health Care Cost Growth Target” (the Target) applies “across all Rhode Island health care markets and populations.” 

The stated objective of the 3.2 percent Target is to curb the healthcare cost curve, which the executive order claims “has historically outpaced economic growth in Rhode Island.”  According to the Kaiser Foundation, Rhode Island ranked tenth in the nation in per capita health care spending in 2014 and had the fifth highest average single premium per employee for employer-based health insurance in 2017.

In signing the executive order, Gov. Raimondo was acting on the unanimous recommendation of the Rhode Island Health Care Cost Trends Project Steering Committee (the Committee), which consists of representatives from providers, health insurers, business owners and State government officials.  The Committee convened last year at the request of the State to select an appropriate economic indicator to adopt as the basis for the Target.  In November 2018, the Committee issued a report in which it recommended basing the Target on the value of Rhode Island’s Potential Gross State Product (PGSP) – the total value of the goods produced and services provided in the State at a constant inflation rate.  With the assistance of Brown University’s School of Public Health, the Committee determined that the PGSP for Rhode Island is 3.2 percent.  All eighteen members of the Committee have entered into a compact to put forth their best efforts to meet the Target. 

The executive order instructs various state agencies, including the Executive Office of Health and Human Services and the Office of the Health Insurance Commissioner, to take certain actions to ensure that the 3.2 percent Target is met.  The directed measures include engaging insurers and providers to develop strategies to help meet the Target, ensuring that savings realized by insurers are passed on to consumers, reporting annual performance relative to the Target, and publishing a manual explaining how the Target is calculated and how to assess performance.  In addition, the executive order specifies that the Target will be reassessed in 2022 and replaced with a new Target for 2023 and beyond.