Regulators Praised for Tough Stance on Insurers

October 27, 2009 -- State regulators at the Oregon Insurance Division are getting the thumbs up from health insurance reform advocates who say they’ve drawn a firm line in the first draft of rules to tighten the way they regulate health insurance premiums.

As we reported in September, the division faced intense lobbying by the insurance industry to redact certain aspects of their rate filing from public disclosure. Then Rep. Child Shields, who since won appointment to the Oregon Senate, worried openly that the division might “roll over to the industry.”

After reviewing the proposed rules the division released last week, Larry Kirsch, a consumer advocate for tighter rate regulation, said he was pleased with the division’s stance.

They will allow no exceptions to the public filing.

“They basically agreed with the position some of us had taken, that there should be no exemptions from the public disclosure. I thought that was the right decision to take,” said Kirsch, who’s wife Karen Kirsch has an ongoing case against a 26 percent Regence rate increase on individual health plans in 2008.

The Kirsch case is expected to come before the Ninth Circuit Court of Appeals sometime within the next year.

In public rate filings earlier this year, insurance companies requested exemptions from disclosing parts of the documents, such as target loss ratio – the percentage of premium dollars the company intends to spend on medical care. Insurers argued that it and other aspects were trade secrets.

State regulators granted exemptions this year to four Oregon insurers -- Lifewise, PacificSource, Regence and Health Net. Two others – Providence and Kaiser – applied and later withdrew their requests, according to a public records request filed by Larry Kirsch. Rate filings are currently available on-line.

Going forward, if the new rules stand, insurers won’t be allowed to exempt anything from the documents posted on the Internet.  

“We did not have any information that convinced us that consumers would be harmed by making these records public,” Cheryl Martinis, spokeswoman for the Insurance Division.

The arguments by the insurers fell flat in part because Oregon law dictates they demonstrate how trade secrets would harm competition within the industry, and harm consumers -- the latter something most states don't consider. 

Insurers and consumers will have a chance to make their case through at a public hearing slated for Dec. 2 that’s expected to be lively.

These rate filings, by the way, only cover individual, small group and portability plans, excluding the largest segment of insured: the large group plans with 50 or more employees.

Another aspect of the rules that tighten the reins on insurers involve administrative costs. The division stuck to its guns in requesting detailed breakdowns of administrative expenses, everything from general office supplies – including postage – to travel expenses and legal fees.

It also changed slightly the measure by which it would hold administrative costs down. At first, the division intended to use the Consumer Price Index but settled for the Producer Price Index for the Direct Health and Medical Insurance Carriers Industry. Compiled by the Bureau of Labor Statistics, the index rose about five percent annually since 2002.

Take Action

See what insurers will be required to submit here.

View the proposed rule here.

View all aspects of the proposed rule here.

View submitted rate filings and comment here.

For related articles click here.