Health Insurers' Hoped-For Hikes Highlight Tensions With State Law
Inflation and trends in medical care are driving some Oregon commercial health insurers to seek hefty premium increases for 2023, even as the state ramps up a program to curb the growth of health care spending.
Commercial health insurance companies in Oregon want premium increases averaging 6.7% in the individual market and 6.9% in the small-group market used by smaller businesses, the state Department of Consumer and Business Services announced Monday.
A new legislatively mandated program to clamp down on health care cost growth will try to cap per-capita health care spending increases to 3.4% annually, once it is fully implemented in 2024, state officials said. Until then, it won’t have any teeth.
Still, the large gap between insurers’ anticipated 2023 costs and the growth target set in early 2020 highlights the tension created by the pandemic, which led to spiraling staffing costs in much of health care over the last two years.
Among the biggest requested premium increases submitted to the consumer agency is an average of 12.6% by PacificSource Health Plans in the individual market, in which the Springfield company had 25,000 members as of the end of 2021. There’s also an average of 10% requested by Portland-based Providence Health Plan in the small-group market, where the company had 45,000 members as of the end of last year.
Inflation, medical trends and enrollment changes were factors driving the requests, the department said. The agency is seeking public comment and over the next two months will review the applications, making a final decision in August.
The individual and small-group markets constitute just a fraction of the state’s population, but they often serve as bellwethers of larger health care cost pressures.
Oregon’s new spending cap system, called the Sustainable Health Care Cost Growth Target, is an Oregon Health Authority program that’s being rolled out gradually. The first clamp-down could come in 2024, when the state will review 2023 spending by insurers and big providers and possibly set them on “improvement plans” if their per-capita spending growth tops 3.4%, said Sarah Bartelmann, manager of the program.
If insurers or providers persistently exceed the cap without reasonable explanations, the state could fine them.
That system is separate from the consumer agency’s rate-setting system, stressed consumer agency spokesman Jason Horton.
“Our goal … is to avoid approving rates that would lead to financial penalties for (insurers), but the two are entirely separate regulatory processes,” he said.
State law tasks the agency with setting premiums that are reasonable in relation to benefits offered, cover the cost of claims and aren’t unfair or excessively high.
As the Oregon Health Authority steps up its analysis of provider and insurer spending, the agency in coming years will provide that information to the consumer department for possible use in rate setting, Bartelmann said.
She stressed that the health authority’s program examines total insurer and provider spending — from health care services to administrative costs and profits — while the consumer agency’s rate setting focuses on premiums.
At the end of 2021, some 167,000 Oregonians were covered through individual policies and 165,000 by small-group policies. The vast majority of Oregon’s more than 4 million residents are covered by other policies: large-group insurance plans that are negotiated between insurers and employers, and the government’s Medicare and Medicaid programs — the latter known as the Oregon Health Plan.
In Oregon’s individual health policy market, six companies submitted rate hike requests ranging from an average of 2.3% to 12.6%, for an average weighted increase of 6.7%, the state said. In the small group market, nine companies submitted requests ranging from no change to an 11.6 % increase, for a weighted average increase of 6.9%, the state said.
Even without those hikes, Oregonians will see a surge in premiums due to the expiration of temporary subsidy increases for individual plans bought through the federal marketplace website. The special federal subsidies, implemented as part of economic relief during the COVID-19 pandemic, helped cut monthly premiums by an average of 46% since enactment in 2021, according to the state.
Oregon Insurance Commissioner Andrew Stolfi said he’s pleased so many insurers are offering plans.
“Oregon continues to have a strong and competitive insurance marketplace, with four carriers offering plans statewide and Oregonians in most of our counties having five or six companies to choose from,” said Stolfi, who is also the director of the state’s? consumer department.
Highlights of the average requested rate increases in the individual market include:
- Kaiser Foundation Health Plan of the Northwest (39,000 members as of December 2021): 4.7% increase, taking monthly premium for a Portland area silver plan for a 40-year-old to $460.
- Moda Health Plan (32,000 members): 5.8% increase, raising premium for Portland silver plan to $454.
- PacificSource (25,000 members): 12.6% increase, raising premium to $507.
- Providence Health Plan (52,000 members): 7.5% increase, raising premium to $479;
- Regence Blue Cross Blue Shield of Oregon (19,000 members): 4.6% increase, raising premium to $451.
Highlights of the requested average small-group rates include:
- Kaiser (28,000 members): 3.9% increase, taking Portland silver premium to $348;
- PacificSource (10,000 members): 4.2% increase, taking premium to $385;
- Providence (45,000 members): 10% increase, taking premium to $379;
- Regence (64,000 members): 7.4% increase, taking premium to $385
- United HealthCare Insurance Co. (10,000 members): 9% increase, taking premium to $446
Virtual public hearings about the 2023 health insurance rates will be held July 27-28. A web address for the public hearings will be posted at oregonhealthrates.org. Each insurance company will provide a brief presentation of its rate requests, answer questions from the division, and hear public comment, the state said.
Residents can submit comments online via oregonhealthrates.org and during the public rate hearings.
You can reach Christian Wihtol at [email protected].
May 26 2022