UnitedHealthcare of New England on Thursday was chosen to administer the insurance plan for Rhode Island's 25,000 state employees and retirees, leaving rival Blue Cross and Blue Shield to complain the state seemingly "turned its back" on the nonprofit insurer.
The healthcare contract is now held by Blue Cross and Blue Shield of Rhode Island, which has been widely criticized this year for rising premiums, reimbursement rates and benefits for its executives.
Gov. Don Carcieri said the new three-year contract is projected to save the state more than $25 million, when compared with the current Blue Cross contract. The state is self-insured. Rather than pay United a premium for each insured employee, the state will reimburse United for any claims.
"This is great news for state employees and for taxpayers," Carcieri said. "This new contract is projected to save Rhode Island taxpayers ... while state employees will enjoy added conveniences, such as a broader pharmacy network."
Blue Cross also bid on the new contract, which will cover 16,000 state employees and 9,000 retirees. The state's current contract expires Dec. 31.
Blue Cross spokesman Scott Fraser said the company was disappointed. He said Blue Cross' proposal would have saved the state nearly as much as United's proposal, though he couldn't provide details.
He said the state could also have allowed workers to choose between the insurers, rather than offer an exclusive contract.
The state's current contract is an exclusive deal with Blue Cross. In the past, state employees and retirees have had a choice of insurers.
Carcieri spokesman Jeff Neal said that besides offering about $8 million more in savings over the current contract than did Blue Cross, United's bid includes some extras. One allows workers to choose from an expanded pharmacy network. The agreement also allows cities and towns to contract with United at the same administrative rates as the state.