Health Net Readies Premium Increase

On the heels of legislation aimed at reducing costs, Health Net says new laws will increase premiums

June 22, 2009 -- Governor Ted Kulongoski has yet to sign into law a provider tax (House Bill 2116) that will allow another 80,000 children and 35,000 low-income adults to become insured. Nevertheless, Health Net of Oregon plans to charge higher rates to compensate for the 1 percent premium tax.

In an announcement sent last week, Lisa Trussell, director of government and regulatory affairs, told insurance brokers and consultants the tax would result in higher costs, which would be passed onto employers, in a memorandum obtained by No other Oregon-based insurer has made a similar announcement.  
Health Net also opposes the major healthcare reform measure led by Rep. Mitch Greenlick (D-Portland). Known as House Bill 2009, it will establish a health policy board charged with cutting costs over the next decade, while creating a more efficient and effective healthcare system.
Nevertheless, Trussell wrote, “passage of this bill will increase health plans’ administrative costs, due to numerous new reporting requirements. These costs may ultimately contribute to higher premiums.
“While these bills contain some elements that may be beneficial to Oregon, we believe that they force businesses to unfairly shoulder the responsibility of health care reform. A tax on health insurance premiums is the wrong approach and will not provide for a long-term solution to our state’s current health care situation.
“For these reasons, Health Net did not support passage of HB 2116 and HB 2009. We are committed to working collaboratively to find long-term, broad-based, sustainable solutions. Our industry association, America’s Health Insurance Plans is working at the federal level to achieve those outcomes.”
On March 31, Health Net of Oregon had 126,900 members. With a net income of ($!.2 million), it spent $10.3 million on administrative expenses and had a medical-loss ratio of 89.6 percent, which translates into an 10.4 percent overall administrative cost. 
Nationwide Health Net has 11 million members and $14 billion in annual revenues.
Last year, Chris Ellertson, CEO of Health Net of Oregon saw his salary rise by 16 percent, after taking home $248,639.
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