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.
To review insurance rate requests and participate in the review process click here.
Sep 22 2010