Tufts Health Plan, a Massachusetts-based health insurer, wants to come back to Rhode Island and offer an alternative to the two insurers that now dominate the market.

Tufts, which had a small number of Rhode Island subscribers in the 1990s, has filed papers with the state seeking a Rhode Island license. If it succeeds, Tufts would compete with Blue Cross & Blue Shield of Rhode Island, the biggest health insurer in the state, and UnitedHealthcare of New England.

But even if Tufts gets the license, it won’t sell insurance in Rhode Island unless it also sees a change in state law to allow it to operate under the same rules as other insurers and forges agreements with hospitals to pay reimbursements similar to those paid by the other two, said James Roosevelt Jr., the president and chief executive officer.

If those three elements fall into place as hoped, Roosevelt said, Tufts might start marketing in Rhode Island by the end of next month. The plan is aiming to attract 3,000 subscribers in the first year and 25,000 to 30,000 within five years.

Matthew Stark, principal policy aide to Christopher F. Koller, the state health insurance commissioner, said it would take 30 to 60 days to process the license request, and did not foresee any major obstacles. The commissioner will review Tufts’ contracts to see that they ensure the plan’s solvency, treat providers fairly and benefit the state health-care system. “They have a good reputation,” Stark said of Tufts, which has 680,000 members.

“People will be enthusiastic about having another player in the market to choose from,” Stark said. “I don’t think competition is going to yield the result that everyone would like to see. They’d like to see rates drop precipitously. That doesn’t fit with the reality of rising medical costs.”

But Roosevelt said he expected Tufts to offer “more reasonable premiums.” Tufts’ medical costs have increased less than those of other Massachusetts insurers, Roosevelt said; he attributed the savings to programs that engage patients and providers in making good medical choices.

Currently, Tufts covers about 8,000 Rhode Islanders who obtain their insurance from Massachusetts employers. To serve those subscribers, it has contracts with all the hospitals and a little more than half the doctors in Rhode Island. But, according to Roosevelt, Tufts pays hospitals a higher rate than other insurers because out-of-state insurers never get rates equal to those of in-state insurers. Tufts wants the hospitals to agree to rates equal to those of other insurers.

The other condition that Tufts needs to change is a state law that says only health plans that did business in Rhode Island in 2001 can take the health status of members into account in setting rates for small groups. As a result, only Blue Cross and United can increase premiums for groups whose members are less healthy. Roosevelt said that Tufts must operate under the same rules in order to be able to compete in the Rhode Island market. The legislature is considering changes to that law.

Tufts operated in Rhode Island from 1995 to 1999 and left the state just as Harvard Pilgrim Health Care of New England collapsed. At the time, competition among five health insurers had spawned a price war that drove premiums below costs. But Roosevelt said Tufts did not lose money on its 5,700 Rhode Island subscribers. Rather, financial difficulties in Maine and New Hampshire led to the closing of the subsidiary that served the three states.

This time, Roosevelt said, Tufts does not plan to set up a subsidiary. Instead, the parent would open an office in Rhode Island, its first venture outside of Massachusetts since the 1990s.

“We’ve grown and become very much stronger over the last several years and we’re ready to come back,” Roosevelt said. Tufts left Rhode Island “with everybody paid and nobody with a bad taste in their mouth,” he said.

“People have faced the choice only of one plan that dominates the market and therefore is not as responsive as it could be,” Roosevelt said, referring to Blue Cross, “and one plan that is for-profit and runs everything from out of state”: United.

In contrast, Roosevelt asserted, Tufts is “very much committed to collaboration with doctors on the quality of care.”

Asked whether the increased competition from Tufts’ arrival would lead to a repeat of the 1990s price war, Stark, of the insurance commissioner’s office, said: “We certainly have the authority to gauge the carriers’ solvency and to see red flags. If anything was to happen, we have the capability of flagging it and doing something about it.”

Tufts Health Plan has consistently received high ratings from groups that measure quality of care. Last year, Tufts was named number two in the country by U.S. News & World Report and the National Committee of Quality Assurance, based on clinical performance and member satisfaction.

Roosevelt is the former president’s grandson and a Democratic Party activist; he co-chaired the rules committee that a week ago decided how to apportion primary delegates from Michigan and Florida.

ffreyer@projo.com