Insurance Rates Increase Unabated

Oregon regulators prepare for $1 million federal grant to strengthen rate review
The Lund Report
June 24, 2010 -- Double-digit premium increases continue to plague Oregonians this year despite passage of the new health reform law and stern warnings by President Barack Obama to the nation’s health insurers not to gouge consumers.
So far this year, single-digit increases in Oregon are virtually obsolete, according to a review of rate filings with the Oregon Insurance Division, which govern small-employer and individual health plans.
More than 500,000 Oregonians covered by an individual or small group plan saw their insurance costs increase on average between 10 percent and 22 percent this year. All but Providence Health Plans and LifeWise small groups saw their health insurance premiums increase by at least 10 percent.
Topping the spikes, HealthNet of Oregon increased the premiums of 5,500 individual members by 22 percent on average.
The Oregon Insurance Division approved all but two proposed rate increases by insurers this year. After reducing a HealthNet increase on small group plans by 1 percentage point (from 13.5 percent to 12.5 percent on 37,189 lives) HealthNet withdrew its application. It still had a 12.2 percent increase enacted in April.
Regence BlueCross BlueShield of Oregon too was denied a 25.3 percent increase in April on 73,271 individual members in favor of a 16 percent increase approved by the Division. Regence’s 57,000 small group members saw their premiums increase 12 percent. The insurer is currently asking the state for a 13.7 percent increase on small group plans in October, one of three rate requests currently pending.
On Tuesday, June 22, President Obama reminded insurers that his administration would be watching closely whether health insurance rate increases were justified.
“There are genuine cost drivers that are not caused by insurance companies,” Obama said. “But what is also true is that we’ve got to make sure that this new law is not being used as an excuse to simply drive up costs.”
Obama’s remarks come on the heels of an announcement by Health and Human Services Secretary Kathleen Sebellius that states would now be eligible for up to $250 million over five years in grants to strengthen insurance rate review.
The deadline is July 7 for the first wave of grants, in which Oregon will likely receive $1 million, said Cheryl Martinis, spokeswoman for the Oregon Insurance Division.
“Generally, we’re looking for ways to increase consumer input, drill deeper into some rate increases, make it easier for consumers to find and use information on our Web site and better manage the increasing amount of data we are collecting through the rate review process,” Martinis said. “I believe we will ask insurers to provide more data, for example, on where medical expenditures are going.”
The federal law also mandates that states review “unreasonable” rate increases by large group health plans, an area where Oregon regulators currently do not have authority.
Part of Oregon’s existing rate review process requires that documents are posted on-line. In them, health insurers justify premium increases based on medical cost drivers. The thinking goes that premiums reflect increases in medical costs.
However, a separate analysis of financial statements submitted by health insurers and previously reported at The Lund Report, show that overall medical and hospital costs in Oregon over the past year have increased around 3 percent – far less than what double-digit rate increases would reflect.
In our year-end review of insurance financial statements, we reported that combined medical/hospital costs went down 6.4 percent from $1.66 billion to $1.55 billion. But insurers covered 8.9 percent fewer people. So we can assume that medical costs actually went up around 3 percent.
Other expenses, such as costs associated with adjusting claims, also contribute to premiums. Regence, for example, spent $125 million on processing claims last year, far more than any of its competitors after factoring in differences in membership.
Larry Kirsch, an expert in health insurance finances, said recent rate approvals by Oregon regulators offer some “disappointing indications” for policyholders. “Some insurers continue to address cost pressures by tightening benefits and augmenting their networks with low-cost providers,” Kirsch said.
In addition, Kirsch said attempts by insurers to contain costs fall “very short on new ideas… Nor is there any immediate evidence that the Division used its rate review authority to move insurers further toward more affordable, top quality coverage.”

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Recent Oregon Health Insurance Rate Increases

Insurer Type Rate Increase Members Effective  
HealthNet of OR Small Group 12.2% 36,844 4/1/2010 See request
HealthNet of OR Individual 22.8% 5,510 10/1/2010  
Kaiser of the NW Small Group 9.9% 31,700 10/1/2010 See request
Kaiser of the NW Individual 9.6% 8,664 10/1/2009  
LifeWise Small Group -5.4% 14,949 1/1/2010  
LifeWise Individual 16.0% 31,765 9/1/2009  
Lifewise Individual *15.0% 28,917 9/1/2010 See request
ODS Health Plans Small Group 16.5% 15,194 7/1/2010 See request
ODS Health Plans Individual 17.7% 14,360 12/1/2009  
PacificSource Small Group 11.5% 34,404 1/1/2010  
PacificSource Small Group *13.5% 38,565 10/1/2010 See request
PacificSource Individual 15.4% 11,114 1/1/2010  
Providence Health Plan Small Group 1.2% 28,594 8/1/2010 See request
Providence Health Plan Individual 15.5% 8,084 11/1/2009  
Regence Small Group 12.9% 57,390 4/1/2010 See request
Regence Small Group *13.7% 56,984 10/1/2010 See request
Regence Individual 16.0% 73,271 4/1/2010 See request
Time Insurance Comp. Individual 15.0% 13,573 5/1/2010  
United HealthCare Small Group 15.4% 11,612 7/1/2010 See request

*Rate request still pending -- represents proposed rate increase. To comment on pending cases begin here.

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An absence of new ideas, indeed. Despite some vigorous and broadly supported efforts to interest insurers in better supporting primary and preventive care, all that has resulted from that, in Oregon, is limited and tentative new resources for tertiary prevention by case management of already-existing high cost cases--engaging a few primary care providers as extensions of traditional case management. The response to rising costs remains reactive and not remotely visionary. IBM and some other large employers are just beginning to demand strong support of primary care in their insurance proposals, based on its proven value in reducing health care costs. It appears most insurers will be brought to that party kicking and screaming, if current indications continue. Oregon's PEBB board and leadership were earlier agents urging updated approaches by their insurers to primary and secondary prevention. I believe one need only ask them about their frustration with most of the market, over recent years. Painfully short term vision remains the norm.

No body should buy the sophistry of prevention, better computers, "investment" and all the other unproven intuitive theories repeated enough, that it becomes "obvious truth". We have been chasing unacceptably high health care costs for decades with one new failed "vision" following another. Reimbursement control, DRG reimbursement, gatekeeper concepts, certificate of need, capitation, risk sharing agreements. Each with their cadre of enthusiastic advocates and good intentions, ...and now we are just engaged in re-branding old junk theory. "Medical Home" is yesterday's "gatekeeper" concept. The challenge to all, "we should do this....." architects should be "prove it" before we simply impose disruptive and potentially damaging theory on others. At one time OHP was the solution for the world to follow, and deeply embedded in Oregon's bragging rights with almost no independent critical post game evaluation. That was the nominal exercise that the State and Feds have spent about $25 billion tax dollars on, before consideration of any cost shifting to the private sector. Our endemic problem in Oregon is a willingness to innovate by simply shifting from one unsubstantiated belief to the next, without predetermined measures, particularly financial in nature, and the adoption of an independent evaluation methodology.

My insurance raised over 50 % in one month time! There was no age change to my policy. The only change was that I got a $1000 deductible and before I had a $500 deductible!!! I am tired of covering for individuals that don't have coverage and use the system! What are my options???