Regence Raises Portability Rates by 6.2 Percent

The insurer had requested a 9.2 percentage increase which was in violation of Oregon law, according to the Insurance Division


February 25, 2013 -- Regence BlueCross BlueShield of Oregon came away with a 6.2 percentage increase on its portability plans -- impacting 4,983 Oregonians – starting May 1. But not before the Oregon Insurance Division determined that Regence’s original request – 9.2 percent – ran afoul of Oregon law.

A rate hike for portability plans cannot exceed “the average annualized rate increase for group business,” and for Regence, that figure would be 6.2 percent, according to the Division.

Regence projected that medical costs increased 7.6 percent in the previous year while prescription costs grew by 11.1 percent. The insurer also said that its claims costs for the portability plans would be about 30.1 percent more than the premiums collected, and that it would lose 36.1 percent on their business over the next year.

“Portability coverage typically operates at a loss, since these plans are primarily of interest to people who are leaving group insurance and who have medical conditions that prevent them from qualifying for individual plans in the commercial market,” according to the Insurance Division. “These plans are allowed to operate at a loss because Oregon law requires that carriers offering portability plans may only vary rates between portability plans and group plans based on objective differences in coverage and may not charge additional premium to reflect adverse selection from those members choosing portability coverage.”

Alan Mudge who lives in Jefferson, urged the Insurance Division to deny Regence’s request, saying the monthly premiums for he and his wife had increased by 91.6 percent since January 2007, and they now pay $33 a day for coverage with a high out-of-pocket deductible and low benefits. Although they’re in reasonably good health and in their mid-50s, Mudge said the couple was denied individual coverage due to “risk factors which fall outside our individual plan underwriting guidelines.”

“We feel trapped and powerless in a healthcare system that is broken and must be fixed,” according to Mudge’s written comments. “I ask the Oregon Insurance Division to not grant this latest attempt by Regence to raise rates yet again before 2014, when hopefully we will get some relief from spiraling costs. Private health insurance in this country has become a luxury very few can now afford.

Another woman, who refused to share her name because of potential negative consequences, said Regence was “making huge money off me and have for years,” saying she spends $10,000 a year for portability coverage. This represents, she said “at least 25 percent of what our household spends on everything per year. I’m feeling robbed already, and you want to raise the cost of care that is lucrative to you and preventive to me. I don’t agree with the principle behind your request and am angry, yet have no alternative access to coverage yet. The current market isn't open to me because of age and minor conditions including over the cost of this insurance.”

People also expressed concern about the high salaries paid by Regence to its senior executives. In 2011, those expenses represented 0.18 percent of premiums – and approximately $0.60 of a member’s average premium each month.

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