OSPIRG Criticizes Providence’s Double-Digit Rate Hike for 2019

The consumer watchdog argues that Providence’s trepidations about federal policy changes are unjustified and inflation trends are higher than its competitors. Providence sells almost half of all individual health policies in Oregon.


A prominent consumer advocacy group has issued another scathing analysis of Providence Health Plan’s proposed individual health insurance rates calling them far too high in what has become an annual event.


Providence has proposed raising individual health insurance rates an average of 13.6 percent in Oregon, but first must face scrutiny and approval from state insurance regulators, who traditionally have cut down the insurer’s initial proposal. The proposed rates would increase average monthly premiums from $380 to $453 for consumers who do not receive subsidies on healthcare.gov, the state and federal insurance market.


OSPIRG, the Oregon State Public Interest Research Group, said Providence Health Plan inflated its premiums based on exaggerated fears of federal changes in the Affordable Care Act.


Jesse O’Brien, the group’s policy director, said Providence overstated the effects of the repeal of the mandate requiring health insurance and the expansion of new so-called association health plans. These plans, following an executive order by President Donald Trump this month, can now override some of the consumer protections in the Affordable Care Act and do not cover many of the essential health benefits. Providence has asked for a 10 percent premium increase to bolster them against these changes.


“This is the third year in a row Providence has proposed a double-digit rate hike on tens of thousands of Oregonians, and their rates have nearly doubled since 2015,” said O’Brien. “This simply cannot continue.”


Looking at the rate breakdown, O’Brien said Providence’s 8 percent annual increase in the cost of medical care and prescription drugs was among the highest in the market and that the Catholic health plan’s long-term forecast of a 19.4 percent trend for prescription drugs was by far the highest in the business.


“You’d think that they’d have a way to insulate themselves better because they have such a close relationship to their delivery system,” said O’Brien, including their own chain of hospitals and clinics, unlike stand-alone insurers like Regence BlueCross BlueShield.


As of March, Providence had by far the biggest share of Oregon’s individual health insurance market, with 93,000 customers, or 47 percent of the market. The next biggest player is Kaiser Permanente, with 47,000 customers or 24 percent.


Providence spokesman Gary Walker disputed OSPIRG’s characterization of his company’s rising prices, noting that rate hikes have averaged 10.6 percent a year since 2014, lower than the industry average.


“We disagree with OSPIRG’s assertion we are ‘overcharging’ consumers. Our actuarial analysis and support data in our rate filing explain the logic behind our trend factor predictions,” said Walker. “While we can't speak to the analysis behind other carrier projections, it's important to note that trend factors vary in part due to populations we serve.”


Walker pointed out that while his company is asking for a double-digit increase, so are many competitors, and the proposed rates put them in the middle of the pack. The Connect Silver plan is the second-lowest cost plan in the Portland metro area.


Last year, Kaiser Permanente had the lowest average premium rates in Portland at $356 a month for a 40-year-old in Portland, followed by Providence. This year, PacificSource Health Plans is making a move to increase its market share by cutting rates and offering the lowest-priced plan at $425 a month.


PacificSource had the most expensive individual health plans for 2018 at $452 a month, a distinction that will shift to Health Net Health Plan for next year, at $513 a month, pending approval of state regulators. Moda Health and Kaiser have also proposed lower rates than Providence for 2019.


O’Brien said Providence has effectively doubled their premium rates since 2015. Last year, Providence proposed a rate hike of more than 20 percent only to see state insurance regulators cut that figure nearly in half, to 10.8 percent, saving $63.8 million for consumers and the federal government, which subsidizes health insurance for Oregonians with modest incomes.


“The more we dig into Providence’s justification, the more concerned we are that the proposed rates may overcharge consumers by overstating the impact of medical cost inflation and federal policy changes,” O’Brien said. “While many Providence members will be able to avoid paying the full premium price by taking advantage of the Affordable Care Act’s tax credits, or may find a lower-cost option by switching coverage, such a large increase will still be disruptive for many Oregon families.”


Walker noted that Providence is the only statewide insurance carrier remaining in Oregon. “We provide insurance options in every county on the insurance exchange whereas other insurers have abandoned many Oregon counties.”


But some areas will have more choices next year. PacificSource, which pulled out of it what had been its biggest market in Lane County after merging with Legacy Health, plans to re-enter Lane and Yamhill counties for 2019. Kaiser will also add competition in Oregon’s second-largest metro area.


O’Brien made some of the same critical observations last year: He accused Providence of overstating medical inflation and wildly exaggerating the effects of potential federal changes to the Affordable Care Act.


You may reach reporter Chris Gray at [email protected].


I used to be a loyal Prov Health Plan member and supporter. Not any more. Each of the last four years it has cancelled the PHP plan I was on, jacked up my premium by double digits, restricted my choice of provider/lab/imaging, etc. and reduced my coverage as far as legally allowable; PHP members are paying more and more for less and less, and it looks like the trend continues. PHP's retreat to the managed care system of the 80's has required me to leave long time relationships with Providence network providers and services to use other Providence providers and Providence-owned services, and to try to figure out the fine print which makes each new plan different from the last.  I don't know if they have become more profit oriented than usual or if they are having a problem managing their systems. Either way I can hardly wait for November to arrive so I can switch to a new plan.