Regence Policyholders Face More Than an 8.9 Percent Rate Hike

About 30,000 policyholders will also see much higher deductibles, and lose mental health coverage and pay more for their prescriptions

August 30, 2012 – The 52,000 Oregonians who purchase their own insurance coverage from Regence BlueCross BlueShield face a double whammy come December 1. Not only will they see their premiums increase – on average – by 8.9 percent, but the majority of people will even face steeper costs -- a $2,500 deductible –  fewer choices of physicians and hospitals in the Portland area (an actual reduction of 80 percent) and their health plan will no longer cover mental health services or routine eye exams.

They’ll also have to pay more for prescriptions, and complementary care services such as acupuncture, chiropractor, naturopathic care or massage therapy have been wiped out.

Approving the 8.9 percent hike on Wednesday, Insurance Division officials acknowledged they faced limitations.

“We don’t have the right to tell an insurance company they have to offer a $500 deductible plan,” said Cheryl Martinis, Division spokesperson. Nor does the Division have any authority if a health insurer decides to eliminate or reduce benefits in the individual marketplace.

Earlier Regence announced plans to eliminate its lowest cost individual policy in October, which also offered more comprehensive benefits.

“With Regence increasing out-of-pocket costs in addition to premiums, many customers will be exposed to greater risk of financial hardship in the case of illness,” according to Jesse Ellis O’Brien, healthcare advocate for the OSPIRG Foundation. Its analysis revealed problems and gaps in the calculations used by Regence. Despite repeated requests, OSPIRG was never able to review this data.

“There wasn’t enough information so we could evaluate the medical claims and look at the expected utilization going forward,” O’Brien said. ““Regence didn’t explain where its numbers came from.”

O’Brien also said it’s unclear whether Regence is doing everything it can to cut waste, focus on prevention or use other strategies to keep their members healthier. And, the insurer doesn’t appear to be headed toward incorporating essential health benefits and other consumer protections to comply with the Affordable Care Act starting in January 2014.

Meanwhile, in a prepared statement sent to other media, Regence officials hailed the Insurance Division’s decision to approve an 8.9 percent rate hike. After all, they came away victorious having only requested slightly more – a 9.6 percent increase. By raising its rates, Regence also projects losing 11,577 members by the end of 2013, and still holds the mantle of having the most individual policyholders than other insurers in Oregon.

Before making its decision on the rate hike, Insurance Division officials visited Regence’s headquarters in Portland, reviewing the contracts it has with five physician-hospital networks – Portland Adventist, Legacy Health, Oregon Health & Science University,
Providence and Tuality Healthcare.

“We had to know that Regence had legitimate reasons for setting their rates based on those networks,” said Martinis. Those contracts were not made public and considered proprietary and confidential. “After looking at those calculations, we agreed that Regence had evidence to base their prices on the differences between those networks.”

Of the 20,000 people in the Portland area eligible to participate in these networks, the average rate increases are: 1.9 percent for Portland Adventist; 10.4 percent for Legacy Health; 11.4 percent for OHSU; 14.5 percent for Providence and 6 percent for Tuality Healthcare.

Statewide, the individual rate increases will range from 0.8 percent to a 15.6 percent increase.

“Medical claims largely drive these increases,” Martinis said. “That’s why we’re very interested in how the network pricing works. If there’s additional transparency between hospitals, it will help drive down costs.”

OSPIRG took exception to the Insurance Division reviewing these documents in a closed-door meeting to justify Regence’s controversial proposal. “This raises questions about the transparency of the rate review process,” O’Brien said.


OSPIRG Foundation’s analysis can be viewed online at the following URL:

A copy of Regence’s rate filing, as well as the correspondence between the insurer and state regulators, is available on the Insurance Division’s rate review website at the following URL:

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