Regence Draws White House Ire For Rate Increases

Massive rate hikes by Regence, which is refusing to insure new children, has drawn the attention of national figures
September 23, 2010 -- Regence BlueCross BlueShield of Oregon and its parent company The Regence Group – which controls health plans in Oregon, Washington, Idaho and Utah – are increasingly coming between the crosshairs of White House officials.
 
An Obama administration spokesman confirmed earlier this month that Regence BCBS of Oregon represented what Kathleen Sibelius, Health and Human Services Secretary, had in mind when she blasted health plans for spreading “misinformation” and hitting consumers with “unjustified rate increases.”
 
Regence recently asked the Oregon Insurance Division for a 22.7 percent average increase on individual plans in October, insisting that up to 5.1 percent was due to new federal mandates that take effect next month, according to its rate filings. For a person in their 50s that amounts to an extra $100 per month on top of their premium of $450.
 
Regence, the largest health insurer in Oregon, has already been granted double-digit rate increases for each of the past several years on its individual and small group plans.
 
As for misinformation, Sebelius was referring to rate requests and letters to consumers blaming the federal reform law in large part for massive premium hikes slated to take effect in coming months.
 
White House officials reportedly contacted Regence executives in the state of Washington about the letters it sent to policyholders, which the company said it would revise, according to a report in the Wall Street Journal
 
Then Regence officials in Oregon announced earlier this week it was joining a wave of insurers nationwide in refusing to sell new policies to children aged 19 or younger or dependent children starting Oct. 1. Children who have an existing policy will not lose coverage.
 
Insurers argue that guaranteeing coverage for children -- without forcing families to buy insurance until 2014 -- will result in parents buying insurance only when their child becomes sick. Federal officials tried to address those concerns by creating an enrollment period to discourage “cherry picking,” but it was apparently not enough.
 
HealthNet of Oregon has also said it will stop accepting new child policies.
 
If Regence and other insurers keep it up, Sebelius and Democratic leaders in Congress have warned they could lose access to the multibillion dollar insurance exchange market that gets under way in 2014.
 
“We will keep track of insurers with a record of unjustified rate increases and those plans may be excluded from health insurance exchanges in 2014,” Sebelius wrote to the health insurance industry trade group, America’s Health Insurance Plans, on Sept. 9. “Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.”
 
Samantha Meese, a Regence spokeswoman, denied the company did anything wrong in its communication about rate increases.
 
“Our goal is to provide accurate and timely communication to all appropriate parties, whether they be members, agents and brokers, employers, providers or regulators,” Meese said. “We are confident that the communications in the market today meet these criteria.”
 
Oregonians with individual and small group policies face premium hikes that are among the highest in the country. 
 
Along with Regence, The ODS Companies are asking for a 20.7 percent average increase on individual plans, blaming 6 percent on new federal requirements. Providence Health Plans, meanwhile, is asking state regulators for a 17.7 percent average increase on individuals, and has said that 1 percent of that hike is due to federal law changes.
 
Insurers are putting themselves in a death spiral by pricing healthy people out of the market, leaving only the very sick to drive up costs, according to Sen. Chip Shields (D-North Portland).
 
“These individual market rate increases are suffocating the entrepreneurial spirit in Oregon,” Shields said. “I would encourage the insurance division to take a fine toothed comb to these exorbitant rate increases. Oregon has a tremendous problem. Strengthening the insurance rate review process in certainly warranted.”
 
Provisions of the Patient Protection and Affordable Care Act that start taking effect today include removing lifetime benefit maximums, annual drug coverage maximums, and cost sharing for preventive services along with raising the dependent age for guaranteed coverage to 25, barring rescissions and covering all children.
 
Government estimates as well as those made by the Urban Institute and Mercer consultants point to likely rate increases as a result of federal reforms this year at 1 to 2 percent.
 
Some difference might depend on plan design, said Cheryl Martinis, spokeswoman for the Oregon Insurance Division.
 
“Clearly some insurers are attributing more than others it appears to healthcare reform,” Martinis said. “We haven’t begun to analyze most of them yet to find out why that might be.”
 
As for children, the state’s Healthy Kids program guarantees insurance for children, offering plans that are subsidized by taxing insurers and hospitals, and also fully priced plans. Regence has chosen not to participate.
 
“If private insurers are going to make the unfortunate decision of no longer offering coverage to children than the need for Healthy Kids is all the greater,” said Cathy Kaufmann, program manager.

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Comments

Would it be too much to expect the Insurance Division to do its job and refuse to participate in this attempt at highway robbery? What is their job, anyway, if not to protect Oregon consumers from such scandalous behavior?! This behavior on the part of Regence suggests that they should be categorized as a for-profit company along with the other insurance giants. They should lose their not for profit status and pay part of their exorbitant profits back to the taxpayers who are routinely subsidizing their existence while being gored by their practices. My name is Sandra Millius "and I approved this message."

I find it hard to believe that people have convinced themselves that asking an Insurance Carrier to pay for more services then they are already covering won't translate into additional premium cost? Example.... if a daycare was MANDATED by the State or Federal Government to provide (2) full meals and (2) snacks to each child everyday...would they need to CHARGE more for their child care fees? Of course they would!!!!!! Like ANY business, government agency or family budget....when you are told you have to pay more then you have to increase your fees. For a Business, that is increased prices for services or goods. For a Government, that is increased Taxes. For a Family, that means you need to increase your income...second job? The other option to cover added costs for all (3) examples noted above is to REDUCE cost!!!!!!!!!!! Businesses - cut employee staff, cut employee benefits Government - cut programs, layoff employees Families - cut spending budget...no frills, make that dollar stretch I also find it interesting that in all of the Media retoric, nobody mentions that Regence has had internal layoffs in trying to cut Operating costs, nobody mentions that another national carrier, Assurant Health, just laid of (150) High level positions in their company to cut operating costs. MONEY DOES NOT GROW ON TREES nor CAN YOU JUST ASUME THAT THE GOVERNMENT CAN KEEP PAYING FOR EVERYTHING....THEY GET MONEY FROM US IN TAXES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

You are comparing apples to oranges. Your example of the day-care is at the extreme. If, for example, your insurance carrier did not cover the maternity and the government mandated that it needed to cover the maternity, does that mean every man, woman and child are going to be pregnant ?? Let's narrow it down to just women, does it mean every women covered by any insurance carrier will start planning to have a baby ? The same scenario happened when the government mandated that all insurance carriers must consider the mental health benefit the same as any other illness. At that time, many insurance companies sent their lobbyists to Salem to try to convince the lawmakers that it would be too costly. As you can see today, not every subscribers went insane and started using the Mental Health benefit and it did not bankrupt the insurance companies. So, what does it mean when Regence has internal layoffs ? It has been doing that for at least the past 5 or 6 years. If a couple is trying to have a baby for the past 5 or 6 years and has been unsuccessful, doesn't that tell you that there is something wrong ? Money does not grow on tree but some CEOs are more than willing to do ANYTHING to pocket what they don't deserve. Take the Regence for an example. If the company has been raising its premium in double digits every year, doesn't that mean the CEO has no AFFECTIVE way of controlling the company expenses ? Can anyone with a good source tell me that the CEO and its board of directors have seen a pay cut ?

The problem I see with your example here is that for the cost of the meals and snacks, people would probably not complain about the price increase commensurate with the cost of those services, after all, they need to pay for the food somewhere, the kids need to eat. But when you add those meals, and add an employee to buy them, another to prepare them, another to calculate their nutrition value, another to market the new service, another to strategize how to capture the market based on this service, another to analyze what the rest of the care providers are doing in order to market that your care center is better at it......sheesh. Pass all those salaries down to the consumer and the care center has just increased the cost of providing a very basic need and it is now cost-prohibitive. Nobody can afford it. Streamline - look at the basic need for basic care (screening, preventive, early onset of illness/disease treatment), apply it across broad population, focus on improving the health of each defined population (hmmm, school lunch programs and better nutrition education might be a good place to start), and perhaps the folks who are moving into very costly treatments might not move there after all. But then again, this might not remain as profitable a business as it is right now for those whose careers are dependent on it remaining the same (at the expense of so many others).

Hey Mr Ignorance, my insurance premium (Regence) nearly doubled from their increases and then plan changes. I'm already sitting with paying an insurance of nearly $300 a month for which I get no benefit outside of cost limits when I visit a doctor just because I'm insured. I have a $5000 deductable and it covers virtually nothing unless I have a major issue. However, I can't just blame insurers. I blame the runaway costs of health care. I also blame every one of you idiots that have good plans that you don't pay for personally and cover everything under the sun but for which premiums through your employers don't even begin to be set at what they should be for such plans. Guess what idiots, it's not necessary, nor even advisable, to run to the doctor every time you or your child gets a runny nose to get antibiotics. The issues with the system are many fold however your idiotic comparision is meaningless.

If only the people who were prone to accidents purchased auto insurance, rates would skyrocket, and the public would complain about the good drivers not being responsible and buying insurance too. If only dying people purchased life insurance the rates would skyrocket and the public would still complain. How is it that those same people don't understand that the same applies to health insurance? I have news for them - Regence already takes a loss on their Individual coverage. Should they lower the rates and try to make up that lost money on small businesses who purchase insurance? Sure, they could use some of their investment income, but then what happens when the unpredictable investment market shifts and they are unable to do so? They would be unable to pay claims, and the public would have to bail them out, that's what would happen. Don't just believe what you read - do some research, and do the math.

It is naive to assume that if everyone is required to buy insurance then rates that doctors and hospitals charge insurance companies will fall and the rates that insurance companies charge us will fall. They won't. It will simply be a windfall for everyone in the healthcare industry whose pricing is not based on an open competitive market. I live in Clark County, Washington. I am not allowed to buy insurance from any company offering health insurance in Washington State. Sound incredible? It's true, check it out yourself. It has been deemed that Clark County residents are part of Oregon's system so I must buy from an Oregon provider. Doesn't anyone understand how ridiculous that is? I can buy car insurance from virtually anywhere. I can only buy Health Insurance from a handful of companies and not even from the ones that operate in the state in which I reside! That is only one of many problems. Reform addressed the problem of access to coverage (although Regence's actions show there may be loop holes there we were not told of) but it really did nothing to address the real problem of runaway costs.

The reform bill did nothing for access in Oregon and the other 33 states who had an existing high risk pool. Access has very little to do with any of this. The problem is price, that is it. The bill increased cost and puts the carriers in a position they are having to stop selling certain products. Brilliant.

I agree, not now but eventually everyone will have access because under the bill that was passed insurance companies will not be allowed to deny pre-existing conditions and all will be required to buy insurance or pay a penalty. My rambling above was to poorly illustrate how the bill does nothing for cost containment, which, I agree is the major problem because if health care were more affordable in the first place more people would have access to it. I think we will find that this bill will bring forth a plethora of new problems and costs as it unfolds that were previously unseen.

This is so sad on so many levels. It is sad because what Regence is being told is "if you let people know the truth is that premiums are going up because of this bill we won't let you participate in the exchange." That is a pretty big hammer. The fact is that premiums are going to go up 3-6% on top of the existing double digit increases starting with 10/1 renewals and we haven't even got to stuff that is going to make it go up at an even higher rates (taxes on medical device and pharmacy manufacturers and additional taxes on insurance companies). The bill did nothing but make the cost worse, no debate allowed on that topic, it's a fact. How funny is it that "affordable" is in the nameof the bill?

Most of the comments above have been posted anonymously, and are therefore not to be taken seriously. If you want to join the debate on health care reform, then you'll need to listen as well as talk, and not be afraid to identify yourself and stand behind your so-called "facts." Health care is big business in this country. If you don't believe that, look at the salaries, incentives & bonuses that company executives receive. Then there is the inherent redundancy of having a group of employees for each health plan & insurance carrier to perform the business for each company. Now add an "insuance & billing specialist" (one or more staff) that each physician office, clinic & hospital must hire to deal with all of the various health plans so that they can be paid for their services. Add the above costs to that the fact that we are already paying for health care for uninsured Americans - only at a much higher cost than we should. This is because uninsured people don't get preventive care, so by the time they are seen by a doctor, often in hospital emergency departments, their health problems are much worse than they would have been had they had access to care early on. It is a basic human right to receive health care. Every other industrialized country in the world understands this. And the money is already in the system, but it is being wasted on system duplication and expensive health problems that can be prevented. I applaud all who are doing the hard work of making health reform happen, and encourage everyone to support this reform effort. We will all benefit in the end. Kathy Mix

My name is Arnie Teppo and I wrote the post below about not being able to purchase insurance from a Washington provider even though I live there. I also have worked in the health care field for 30 years now. You can call the Washington State insurance commissioner to check my story at 1 800 562 6900. I am sorry but there is very little openness and competition in Health Care. You can't find out what a hospital charges for an x-ray unless you are willing to stay half the day on the phone. You will have a hard time finding out if your Doctor is any good or what the infection rate at your local hospital is. Although those things are getting a bit better with the internet. I have been in meetings where procedures are being priced. The question is never what is our cost or profit margin or over head. No, its how much does insurance pay or what is the hospital down the street charge. It's ridiculous.

The truth about health care is that there ultimately a finite amount of money available to fund healthcare regardless of who pays for it. Medical advances have resulted in certain treatments costing hundreds of thousands of dollars. spending huge sums of money on one person does not guarantee life. Often, death is still the outcome. I often think of a line from a Star Trek movie "The needs of the many outweight the needs of the few'. If we truly want affordable, sustainable health care for all we as a society will have to be willing to say that in order for all people to get basic health care, we will have to deny prohibitively expensive treatments to a few. Is society more willing to pay for a $500,000 transplant for one person or to pay for providing thousands of women prenatal care which goes extremely far in preventing expensive premature births. Money is the ugly reality that no one wants to talk about. Removing pre-existing conditions and lifetime maximums is a noble but dangerous bottle to uncork when there is only so much water in the well to pay for it.

A great example of this corruption and greed can be seen in the documentary "Do No Harm". I suggest you take a look at this film if you have some issues with how so called "non-profit" hospitals are operating around the nation. I use to think the health care field was about helping people.......but money always seems to be the true motivator. Here's the overview: “I couldn’t hire enough staff to know where all of the skeletons are buried. We need whistleblowers,” says Sen. Charles Grassley of Dr. John Bagnato and Charles Rehberg, who exposed shocking unethical practices towards uninsured patients at Phoebe Putney Hospital, a non-profit hospital in Georgia. Do No Harm tells the incredible and often outrageous story of two men in a small, southern town who endured relentless attacks in order to draw national attention to hospital corruption and the plight of the uninsured. After reading articles such as the one above ,and watching movies like "Do No Harm" my enthusiasm as a fresh graduate entering the health field is diminishing. I encourage you to take the time to watch this movie.