Regence BlueCross BlueShield Seeks 4.5% Rate Increase for Small Businesses

December 22, 2011 -- Small businesses in Oregon will find themselves paying more for health insurance if a 4.5% rate request by Regence BlueCross BlueShield is approved by the Oregon Insurance Division.

A public hearing on this rate request, which would take effect in April 2012 and impact 47,806 members, is scheduled for 2 p.m. on January 5 at the Labor and Industries Building in Salem. People can also submit written comments until January 7 by going to http://www.oregonhealthrates.org/

Regence has lost more than 11% of its enrollment since its last rate increase was approved in March 2011 that impacted when its enrollment reached 54,299 members.

Earlier this year, Regence asked small businesses to pay 10.8% in higher rates, but the Insurance Division reduced that request to 9.1%, which took effect in July.

The proposed increase could be as high as 8.5% or a decrease as much as 6.6%, depending on the age of people covered, where they live, whether family members are covered and when their policy renews.

In its filing to the Insurance Division, Regence indicated that medical costs had increased by 10.8% since April 2011, while prescription costs grew by 12.2% during the same period, and that these figures “represent a lower-than-expected change in the cost of medical care.”

Regence pointed out that this request represented a 2.2% decrease from rates previously approved for the same effective date due to lower than anticipated medical utilization.

Also, since April, Regence took in $229,643,974 in premiums and paid claims of $184,458,183 – and contributed $5,970,743, to its surplus, adding that by subtracting the premiums and paid claims, the remaining balance does not result in a $5.9 million surplus. "The missing pieces include the cost of administration,overhead, premium taxes, portability charges, and assessments for the Oregon Medical Insurance Pool," according to the filing. However, the specific costs of those expenses were not delineated in the filing, nor does the document say how much money went into Regence's reserve account. 

The proposed rate increase has already drawn comments from policyholders who’ll be impacted by the higher rates.

“It is totally inappropriate to grant this increase since the last one was too much,” according to a comment from K. Voyle of Hillsboro. “Are they just raising their rates so that they can justify an exorbitant rate once the new healthcare law is enacted?
It was interesting to see how much marketing material they gave away last summer at the zoo concerts. Maybe they should try less expensive give-away programs that most people don't need. I'd rather have lower premiums than a key chain. Can Regence BlueCross BlueShield stop seeking such high profits and consider that the people they insure haven't had any salary or benefits increases rather, companies continue to reduce total compensation; that is if they don't layoff their employees.”  

“While this may be a more reasonable request, I do not believe in light of the past years of incredible increases that any increase is reasonable,” according to R Yandel of Springfield. “BlueCross BlueShield should have to cut costs are Oregon families have had to do. This rate increase is unfair, and once again allows BlueCross BlueShield to hold the health of Oregonians hostage.”

J. Chiles of Portland suggested that Regence “provide ample evidence that their costs have increased and that CEO's and other executives’ salaries should be made known before and after a rate increase so as to prove that it's not merely a matter of the richest in the company seeking to buy a second yacht or what have you. Furthermore, prior to and after a rate increase the matter should reflect in a measureable fashion that there is an increase in the quality of services provided by the insurance company.”

From the Insurance Division’s perspective, Regence is adjusting its rates down from what it anticipated charging next April, said Cheryl Martinis, spokesperson.

“Regence is not the first company to do this,” she said. “The story in rates for 2011 was that insurance companies saw lower-than-expected medical claims. Many observers speculated that the economy forced people to forgo medical care because they couldn’t afford their share of the costs. In Oregon, with its highly competitive market, a number of insurers came in as they experienced lower claims and effectively reduced rates. We also looked very closely at how much insurers were projecting for future medical trends, based on what we were seeing, and sometimes cut insurers back in this area. As you know, while consumers only get one rate change a year, companies can file periodically. This allows them to adjust rates for new buyers.”

FOR MORE INFORMATION

· To read about Washington’s Insurance Commissioner launching a market conduct study into Regence plans in Washington, click here.

· To read about the $100,000 fine imposed by CMS and find the board members of The Regence Group, click here. 

· To read about how regulators didn’t question the $56.5 million payout by Regence BlueCross BlueShield, click here.

· To read about the leadership shake-up at Regence click here. To read about the investigation of Regence by Washington’s insurance commissioner, click here. 

· To read about Regence BlueCross BlueShield’s losing its status as the leading insurer in Oregon, click here.