OSPIRG Says Regence BlueCross BlueShield Must Justify Proposed Rate Increase

If approved by the Insurance Division, small businesses will see their rates increase by 4.5% in April and, jump by 8 percent starting in July

January 12, 2012 -- Before the Insurance Division approves the rate request for small employers by Regence BlueCross BlueShield, it needs to justify those increases, according to Laura Etherton, healthcare advocate for OSPIRG Foundation.

“Regence needs to provide full calculations and methodologies and information to back up that rate increase,” she said. “We’re also urging Regence to do everything it can to improve the affordability of its health plans.”

Health insurance premiums are reaching $2,000 a month and beyond for some families, Etherton added. “And, small businesses are hanging on by their fingernails. We’re calling on Regence to redouble its efforts to lower costs not by raising deductibles but by improving access to prevention and reducing waste.”

Regence’s proposed rate request would impact 47,806 small businesses (fewer than 50 employees).  Employers whose insurance policies renew between April and June would realize a 4.5% increase, on average, while the 34,790 businesses that renew starting in July would see their rates jump by 8% on average.

And, some businesses, with older employees in certain regions of the state, could see their rates rise by as much as 15%.  

The Insurance Division anticipates making a decision by January 20.

To justify these increases, Regence anticipates a 10.8% increase in medical costs and 12.2% in prescription costs.

Two drugs have seen dramatic increases in the past several years, according to  Karin Swenson-Moore, director of actuarial pricing at Regence, who said the cost for Copaxone, a drug used to prevent the relapse of multiple sclerosis, has risen by 329% since 2007 from $320,753 to $1,237,478 in 2011.

Another drug known as Humira, which treats psoriasis, rheumatoid arthritis and Crohn’s disease, saw a 444% increase over the same time span, and cost $1,042,698 last year.

Despite this information, Regence’s claim costs only rose by 3.5% in 2011, said Etherton. And, its proposed medical trend is “greater than the medical trends used by other insurers in the small business market.”  

Since raising rates last year for small employers, Regence saw its enrollment decline by 10%, after nearly 6,000 businesses dropped coverage.

That decline troubles Etherton. “We certainly hope their enrollment will stabilize. Last spring they said that they didn’t expect a change in enrollment when they requested a rate increase. Given the fact their enrollment is declining, Regence can benefit even more from aggressive efforts to lower its costs.”

Regence is attempting to control costs going forward, Don Antonucci, president of Regence BlueCross BlueShield, told Insurance Division regulators at a hearing earlier this month. “We’re doing everything we can to make healthcare affordable” and stabilize and rebuild membership.

To help small businesses, Regence has begun offering a new product known as Employee Choice, a multiple option choice product that provides employers moe flexibility to better assist employees with different healthcare needs. To date, 60 groups have chosen this option with about 800 members, and it accounts for 13% of Regence’s small group business, Antonucci said.

To read about Regence BlueShield leaving the Medicaid market in Washington, click here.

To read about Kaiser being on pace to take the membership mantle away from Regence, click here.
To read about Washington’s Insurance Commissioner launching a market conduct study into Regence plans in Washington, click here.

To read about the $100,000 fine imposed by CMS and find the board members of The Regence Group, click here
To read about how regulators didn’t question the $56.5 million payout by Regence BlueCross BlueShield, click here.
To read about the leadership shake-up at Regence click here.
To read about the investigation of Regence by Washington’s insurance commissioner, click here
To read about Regence BlueCross BlueShield’s losing its status as the leading insurer in Oregon, click here.
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Regence does not want to insure small groups because the new computer system they have is not user friendly. The new system is designed for mass production of claims with the same type of coverage.

It's getting close to incentive pay out time. Every year the payout is a percentage based their figures of gains. If it was a good year that percentage would be 5% of your total gross pay, however if you are were in management that 5% would go up to 12% of your total gross pay I worked for Regence for over 30 years and had to deal with the unfair, greedy practices of the management. I am so glad to call myself a former employee. Crooked Company.

In Mark Ganz's eyes, every year is a good year. They'll get the incentive unfortunately, he wouldn't want them to not have a bonus after accomplishing great losses on investments, huge membership loss and first place in complaints with Insurance Commissioner's office. Go Regence! Enjoy the money now Regence employees, soon the Feds will come marching in and then where will you be; 5% richer and with no job?