Regence Seeks Rate Hikes in Washington and Oregon in the Individual Market

A public hearing has been scheduled for 3 p.m., July 30 in Salem for the rate hike affecting nearly 53,000 Oregonians

July 6, 2012 – Regence BlueCross BlueShield is after rate hikes in both Oregon and Washington for people who purchase their own coverage. A public hearing on a rate request impacting close to 53,000 Oregonians is scheduled for 3 p.m., July 30 in Salem. If approved, that 9.6 average increase would take effect in December.

Nearly 90,000 people in Washington could also end up seeing their costs increase by 14.7 percent on October 1.

But Mike Kreidler, Washington’s insurance commissioner, has already made it quite clear that Regence’s request will face intense scrutiny.

“It will undergo a rigorous review by our actuaries,” Kreidler said. “Regence contends that even with this increase, it would lose $4.5 million from the company’s surplus. To put that in perspective, that’s less than half of 1 percent of the company’s $1 billion surplus. In fact, Regence could continue to lose $4.5 million annually for the next 220 years, and it would still have a surplus.”

Regence spokespeople were unavailable for comment, but according to a press release from Jonathan Hensley, president of the company in Washington, “We understand that it’s becoming harder for individuals to afford the increasing cost of healthcare. But as dozens of carriers have abandoned this fragile market over the years, Regence is doing our best to continue offering a comprehensive set of affordable benefits to serve Washingtonians, even as we predict a loss of $4.5 million on this business this year.”

In Oregon, the public can participate in hearings on such rate requests, but that’s not the case in Washington.

“We can’t recall any legislation to that effect,” said Rich Roesler, public affairs spokesman for the insurance commissioner. “In fact, we had a surprisingly hard fight last year just to get legislation allowing us to post the full rate filings and accept comments online. Prior to that time, the filings were considered confidential.”

Kreidler has also been unsuccessful in convincing the legislature to give him permission to consider the size of an insurer’s surplus before approving or denying a rate hike for individual and small group plans. But he refuses to give up despite the lobbying efforts by the insurance companies.

“Under current law, we don’t have the authority to consider it,” Roesler said. “The commissioner has sought legislation three times to change that – and plans to ask again in January. The bigger these surpluses get, the harder it is to ignore this elephant in the room.”

Regence, along with the other major insurers in Washington, have raised objections, claiming their surpluses shouldn’t be considered because those revenues are needed to protect their financial health in the face of unexpected costs and the new reforms in the Affordable Care Act.

However, Kreidler believes that insurers are building up a financial cushion that "comes at an expense for people" and said that the cost of individual health policies in Washington has more than doubled between 2005 and 2011.

"Consumers are clearly paying more attention to this issue — as they should,” he said. “And it looks like, in most cases, the already-large surpluses are continuing to grow."

At the end of March, Regence BlueShield boosted its surplus by nearly 4 percent, from $856 million to $994 million. That occurred after Regence lost $10 million on its insurance business and sold a downtown Seattle building for $51 million. Regence also saw its membership drop by 41 percent from 2002 through 2011 – going from a high of 1,017,729 members to 599,849 on December 31, 2011.

The 14.7 percent rate request isn’t the only ones impacting people in Washington. Earlier this year, Regence BlueCross BlueShield of Oregon filed a 6.4 percent rate increase that would have effected 2,742 people in southwest Washington and resulted in a projected profit of 5.8 percent for Regence, according to documents filed with the Washington State Insurance Commissioner.

However Kreidler raised objections, and Regence withdrew its application “for the time being but didn’t cite a reason,” Roesler said. “Any future rate request will face the same thorough scrutiny.

Had that rate increase gone through, Regence anticipated premium revenues of $12,061,869; claims costs of $8,847,775 (80.3 percent); administrative expenses at $1,692,590 (13.9 percent) and a profit of  1,511,505 (5.8 percent).

When asked why the rate filing had been withdrawn, Georganne Benjamin, spokesperson for Cambia Health Solutions, the parent company of Regence, said, “Due to recent changes in individual product offerings in the Clark County market, we made the decision to delay our filing to review any potential impacts on our request.” She declined to provide any other details.

Before that request was withdrawn, Julie Goldbeck, of Vancouver, Washington, posted the following comment on the Washington State Insurance Commissioner’s website: “Blue Shield's explanation for requesting a premium increase doesn't add up. I have some comments. I have Evolve Plus with a $5,000 deductible and a $357 premium. My plan already covers women's preventive services/contraceptives.

“It already covers brand-name drugs with a higher cost to the subscriber. So I'm not sure what their reasoning is on those two issues. These things are ALREADY covered. Regarding oral chemotherapy drugs, realistically how many subscribers are going to need that?

“Probably not that many that it would drastically increase the amount of claims they are paying out. Looked like most of the increase would be with the HSA plans so why ask to increase ALL plans 6.4 percent. They are pricing individuals out of the market and increasing the number of uninsured Washingtonians.”

Also, a high-level executive currently working for Regence told The Lund Report that Regence is requesting these rate increases in Oregon and Washington in an attempt to reduce the number of people buying coverage on their own, considering them high risk because they use too many medical services which is cutting into Regence’s bottom line and profitability.

Benjamin would neither confirm nor deny this, only saying in a written response to questions from The Lund Report, “I do not have any additional information to provide.”


For more information on the rate request pending before the Washington Insurance Commissioner and to post a comment or read what other people are saying about the
increase, click here


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"Regence is requesting these rate increases in Oregon and Washington in an attempt to reduce the number of people buying coverage on their own..." This is consistent with my observations of their pricing and market behaviour over the past several years. Regence does not want to be in the individual market any longer - having long since abdicated the large group market. Mark Ganz is not interested in being a claims payor, and by shedding membership, will eventually be able to leave the arena completely. This will allow "Cambia" (no longer Regence) to focus on Ganz's decade-long quest to "transform healthcare". A review of Cambia's trademarks shows an emphasis on social networking apps, member engagement services, and other activities that are only tangentially related to being a health care services contractor. The Shield will eventually be sold - the only question is, to whom? My prediction: Anthem or Healthnet will pick up both the Cross and the Shield in Oregon, and Premera will pick up the Shield in Washington.