If the 15.7 percent rate hike is approved, some people plan to drop coverage
August 8, 2012
August 8, 2012 -- Providence Health Plans has not provided sufficient justification for its proposed 15.7 percent rate increase for individual members, and the Insurance Division should not approve it until more information is known, a healthcare analyst for the OSPIRG Foundation said.
The rate increase would have a significant impact on the plans’ more than 12,000 subscribers, forcing some to drop coverage and endangering the stability of the plan, Laura Etherton told a public hearing August 2 on the rate increase.
She said Providence hasn’t provided enough data to justify the rate increase, and that the insurer’s 7.2 percent trend projection “may be inflated” and might be closer to 6.7 percent.
At least 12 opponents of the rate hike who filed their complaints with the Insurance Division online, warned that many members would have to drop coverage if the increase goes through.
On Tuesday, a petition was filed with 900 signatures urging insurance officials to scrutinize the rate increase request so “consumers aren’t hit with more excessive rate hikes.”
Cary Walker, Providence’s director of underwriting and pricing, defended the company’s request at the hearing, saying medical and prescription drug costs rose last year by 18.8 percent compared to 2010.
But critics weren’t buying that.
“It’s not clear from the information provided so far that Providence is doing all it can to reduce the costs of care by cutting waste and improving quality,” Etherton said.
If approved, the rate hike means nearly 90 percent of Providence’s individual members would see a rate hike of 15 percent or more, according to OSPIRG. This would come a year after a sizable decrease, making the insurer’s pricing difficult for consumers to deal with, as large annual price swings “have disruptive effects for consumers operating on a budget,” she said.
OSPIRG is also concerned that the large rate hike would result in the plans’ healthiest members leaving, as they seek more affordable healthcare or take the risk of being uninsured. This would leave sicker members in the plan, endangering its stability.
Insurance Division officials also asked questions about the stability of the plan. Walker said it’s hard to access Providence’s competitiveness “with a high degree of confidence” because other insurers are also requesting rate increases. Generally, he said, Providence “enjoys a competitive position in the richer benefit designs…and are less competitive in those benefits that are leaner” or require members to pay more. He said the company is not anticipating a decrease in its total membership.
Etherton did acknowledge Providence had submitted answers to some of OSPIRG’s questions only hours before the hearing, but the group didn’t have time to evaluate them thoroughly, and there could be some supplementary information that might mitigate the criticism. Overall, OSPIRG urged the Insurance Division to not approve the rate hike without additional information.
Shane Jackson, a lobbyist for the Autism Society of Oregon, testified saying Providence illegally denies coverage for people with autism and other developmental disabilities.
As of press time there were 12 negative comments on the Division’s website urging officials to reject the increase. One commenter from Portland wrote:
"’Providence Health & Services is a not-for-profit Catholic healthcare ministry committed to providing for the needs of the communities it serves, especially for those who are poor and vulnerable.’" These words extracted exactly from the Providence website are almost laughable, as they directly contradict the moves highlighted in Providence's application to continue to raise its rates.”
That person has Providence insurance but said they’d to drop coverage if the rate hike is approved because the plan would no longer be affordable.
“HELP! We are drowning out here. No increase!!! This is a small pool that keeps getting hammered. Let's make it a little more fair,” wrote WW from Portland in a comment submitted August 3.
The public comment period closed Tuesday, and a decision is expected early next week, a spokesperson for the Insurance Division said.
