OSPIRG Takes on Premium Spikes

Can insurance rate regulation overcome the industry's high-powered lobbying efforts?

April 15, 2009 -- The Oregon insurance industry faces a showdown from consumer advocacy groups, small businesses and unions that want stronger regulation of premium increases.

“Oregonians deserve strong accountability; they’re getting clobbered with excessive rate hikes. They need a fair watchdog to protect consumers and businesses,” said Laura Etherton, an advocate for OSPIRG, who’s leading the effort. In March the consumer advocacy group delivered 1,000 comments to state regulators against 19 percent premium increases by Regence Blue Cross BlueShield of Oregon.

House Bill 3145 would give greater authority to regulators at the Oregon Insurance Division, which supports the effort. Currently, insurers only need to show that rate increases are “reasonable” and not “prejudicial” based on the geographic average of age groups.
The Oregon School-Based Healthcare Network was just stung with a 48.4 percent rate hike by PacifiCare, which is owned by UnitedHealth Group. “It’s like being kicked in the teeth; the economic impact is too extreme,” said Tammy Alexander, board chair. “We’re a small nonprofit working on healthcare access.”
Employees didn’t incur any major medical expenses during the past year, Alexander said. “There were no surgeries, just general office visits,” she said. When their renewal letter arrived last month, PacifiCare didn’t give any explanation. With four employees (one full-time, the others part-time), individual rates skyrocketed from $311.40 to $462.17 per month. Part-time employees pay half the monthly premium.
Insurers don’t like being questioned or being told what to do. That’s evident in the way they’ve reacted to OSPIRG’s attempt to rein in costs. Their lobbyists, who enjoy a very strong presence in the Capital, contend that greater oversight will lead to higher administrative costs.
“This is not about healthcare reform,” said Mike Becker, who lobbies for Regence. “This is about untested experiments.”
Becker made the comments during a March hearing for HB 2432 and HB 2433, submitted by the Insurance Division. Aspects of HB 2433 will get folded into HB 3145, which awaits a public hearing in the Consumer Protection Committee chaired by Rep. Paul Holvey (D-Salem). The bill has far-reaching implications for the insurance industry.
In what’s bound to be one of the most contentious aspects of the legislation, administrative costs could not exceed the rate of general inflation.
Regulators would also have the authority to review financial information when approving rates such as reserves, profit margin, investment income and anticipated medical and hospital costs.
The burden would be on insurers to determine if the proposed increases create an unfair advantage causing people to drop coverage. Changes to co-payments and deductibles would also be considered. Insurers would have to explain any benefit changes, while participating providers would need to use evidence-based clinical standards, established by an the Health Resources Commission or Health Services Commission. Health plans would not, however, be required to share trade secrets. 
Policyholders could submit comments in advance and have the ability to contest rate hikes. But the final decision would still rest with Cory Streisinger, director of the Department of Consumer and Business Services.
“At the same time we’re trying to expand coverage, we need to tackle waste and improve quality,” Etherton said. “Oregonians deserve that.”
Ten groups are working alongside OSPIRG to pass this legislation. They include the Small Business Initiative, AARP, Oregon Action, Oregon Education Association, The Oregon Bus Project, Oregon AFL-CIO, United Food and Commercial Workers Local 555, Willamette Valley Health Advocates, Oregonians for Health Security and SEIU.

Take Action

Contact OSPIRG lobbyist Laura Etherton here.
Call your legislator by dialing 503-986-1187 within Salem and 1-800-332-2313 outside Salem.
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