Decision on Regence Rate Increase Still Weeks Away

June 30, 2011 – State regulators at the Oregon Insurance Division plan to take an additional few weeks to consider the proposed 22.1 percent average annual increase on Regence BlueCross BlueShield individual health plans.

 

A decision on the rate increase, which drew a rare public hearing last month, was expected by the end of June.

 

In the meantime, several Oregon insurers have posted lower premium rate increases than previously expected mainly due to lower medical costs in the final months of 2010.

 

“We’re seeing companies altering requests or maybe coming in a bit lower than would otherwise be the case,” said Cheryl Martinis, spokesperson for the Oregon Insurance Division. “One theory is that people can’t afford to go to the doctor or see specialists in this economy. No one seems to know if this is a real trend, or if it will last.”

 

In several cases, state regulators have further reduced those increases, saving Oregon consumers millions of dollars. Such reductions by the Division in recent months have become commonplace, which had been extremely rare occurrences in years past.

 

Regence recently lowered an approved 15.5 percent annual rate increase on small group plans awarded in December to 10.8 percent it requested earlier this year because of reduced medical expenses. State regulators lowered the rate increase even further to 9.1 percent effective July 1 because they believed Regence had still overestimated its medical trend. The savings equaled $4.1 million per year.

 

Kaiser, too, was granted an 8 percent increase, rather than a 9.5 percent increase because of lower than expected medical costs.

 

State regulators also reduced a proposed increase on Providence Health Plans small groups from 7.7 percent to 5.9 percent because of inflated administrative costs.

 

Regulators determined Providence’s “increase in projected administrative costs was not acceptable. The projected growth in administrative costs significantly exceeded the U.S. government index that we use to gauge whether changes in administrative costs are acceptable,” according to the decision.

 

The ability of the Division to compare administrative costs to a government index was granted this year from legislation passed in 2009. The savings to the 26,322 Providence members covered under small group policies equaled $2 million.

 

Public comments to the Insurance Division indicated that compensation to Providence top management was a top concern, according to the decision. As a result, regulators determined that executive salary expenses for the company’s top executives amounted to 0.34 percent of premiums or $1.52 of a member’s premium per month.

 

Providence also drastically altered benefit plan designs this year that resulted in a proposed decrease for 11,000 individuals of 0.5 percent beginning in November.

 

To review and comment on proposed insurance rate increases click here.