Senator Chip Shields Shines Light on Rate Review Process

Portland’s Democratic state senator is pushing for a public hearing process, but insurance companies and the state Insurance Division aren’t convinced

March 28, 2011--The debate over how to reform Oregon’s healthcare system is contentious, but everyone agrees on certain facts. Healthcare costs are rising. Insurance premiums are increasing faster than peoples’ incomes. Obtaining insurance that’s both affordable and provides adequate health coverage is nearly impossible for the average Oregonian. And nobody seems to understand how the insurance rate review process really works.

Sen. Chip Shields (D-Portland) wants to change this by shining light on the rate review process and giving consumers a voice through public hearings where insurance companies must justify their rate requests. 

“This is too big of an issue to have happen behind closed doors,” said Shields in an interview with The Lund Report earlier this month. 
As someone who’s started two small ventures and runs the business side of his wife’s primary care practice, Shields has seen firsthand “how exponential increases in premiums are just sucking small businesses in the gut.
 “We’ve got to have small businesses engaged in this process, and bring it out into the sunlight to hold [insurance companies] accountable,” Shields added.
But insurance company representatives and officials from the state’s Insurance Division claim that Oregon’s rate review process is already one of the most rigorous and transparent in the nation, and that public hearings won’t do much to address the underlying costs of healthcare.
Some say Oregon's rate review is already robust
“The ink’s barely dry on [House Bill 2009],” said Mike Becker, director of advocacy and government affairs for Providence Health and Services, referring to the health reform bill that requires the Insurance Division to provide a 30-day comment period after a rate request is posted to its website.
Legislation passed in 2007 tasks the Insurance Division with posting insurance rate requests online and send email alerts to consumers about all rate requests.
According to Becker, “Adding [public hearings] would add redundancy and increase expenses and delays” to the agency’s current process.
While people are feeling the premium crunch in Oregon, the state has one of the lower coverage costs in the nation, said Teresa Miller, administrator of the Insurance Division.
Based on results in the federal Medical Expenditure Panel Survey, Oregon ranked 35th among states and the District of Columbia in the amount paid by a family for coverage offered through a small employer in 2009.
Miller credits the division’s rigorous review process, in which staff members scrutinize a rate increase request in the context of factors such as the company’s financial strength and history of rate increases, as contributing to comparatively lower costs for Oregonians.
“We consider every rate proposal in terms of each company individually, including cost containment,” said Miller, “and push back on high rate increases.”
Other states are taking notice.
“A number of states have contacted Oregon about our processes,” said Miller. “I’ve talked to people from Wisconsin, my staff has talked to people from Washington state who are trying to emulate what we’re doing.”
Shields sees Maine, Rhode Island as models
But while Shields said he “feels positive” about the Insurance Division’s work, he thinks that Oregon could learn from states like Maine and Rhode Island, which have public hearing processes in place and have succeeded in holding insurers accountable for their rate requests.
“Even the threat of public hearings can induce rate decreases,” said Sabrina Corlette of the Georgetown University Health Policy Institute, who has studied the public hearing process. “Maine has used the hearings process quite effectively to achieve lower rates for policyholders.”
In Rhode Island, its health insurance commissioner holds a public hearing every year for the state’s major insurer, BlueCross BlueShield, said Barbara Niehus of Niehus Actuarial Services, and gives people the opportunity to submit comments in advance.
“The nature of the comments consistently relate to the high cost of insurance,” said Niehus, who noted that Rhode Island’s rate increases “haven’t been out of line with national standards.”
There’s a catch, though. Rhode Island’s insurance market is dominated by a single company - Blue Cross Blue Shield - and Maine's by two - Anthem and MegaLife. This makes holding a public hearing much easier than in Oregon, which has seven major carriers, each of which would require its own hearing, either annually or quarterly, depending on how often the carrier files rate requests.
What’s more, recent developments in Maine suggest that all’s not hunky-dory in the insurance world. Federal law requires that companies spend at least 80 cents of every premium dollar on healthcare; Maine applied for and this month received from the Department of Health and Human Services a waiver that allows insurance companies to lower their “medical loss ratio” to 65 cents. This suggests that while consumers may be getting lower rates on their policies now, they may also be getting less out of their healthcare in the near future.
Nevertheless, Shields believes that public hearings could keep both for-profit companies like HealthNet and non-profits like Providence from “stiff-arming their customers.
“No one can make a determination as to whether a filing’s reasonable based on what’s on the web,” said Shields, noting that the language and presentation of a rate request aren’t easy for the average policyholder to understand. “That’s why you need to get the public in a room with insurers and ask questions back and forth and get responses back in a timely fashion.”
Miller said she wasn’t opposed to a public hearing process, but thought it provided more of a catharsis for consumers than any real rate relief.
I don’t think this will result in rate relief for consumers,” said Miller. “We understand how frustrated consumers are, but the only way we’re going to be able to provide relief is through addressing the underlying costs of healthcare.”
Insurance Division to study rate review changes
To that end, the Insurance Division is allocating $150,000 of a $1 million federal grant it received last fall to conduct a study that will explore different ways the division can use the rate review system to reduce healthcare costs. Another portion of the grant funds went to consumer advocacy organization OSPIRG to track, analyze and conduct outreach to individuals and small businesses on rate requests.
A summary of the grant says that the actuarial company conducting the study can propose “any ideas that make sense in Oregon’s health insurance markets,” such as requiring insurance companies to spend more on primary care or rejecting rate increases over a certain percentage per year.
“I’m really excited about this study,” said Miller, adding that its results, due this fall, could help influence legislative changes as early as next year.
“I’m hoping that we can get [changes to the rate review process] in bill form in 2012,” Miller said. She hoped that some of those changes could address the challenge of “turning this process into something that the average consumer can understand.”
But Shields thinks he has the solution to that challenge.
“If you bring insurance rate information to the public, the insurers will have a harder time making the case for rate increases,” said Shields. “If they can’t make the case in a public forum, why even have a process to begin with?”
Prior coverage of insurance rate review in The Lund Report here.


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i think we need to put health insurance in the same place as automobile or homeowners insurance. Primary care is out of control. The only way primary care can make a living and keep the door open is through Fee for service. This is broken. Health insurance, like any insurance, should pay for unexpected problems, catastrophic events. you don't expect your auto insurance to pay for an oil change or windshield washers--yet not getting these inexpensive things taken care of could lead or contribute to costly problems with your engine or contribute to an accident the same is true with homeowners insurance--they don't mow your lawn or paint your house.. primary care is inexpensive and can save thousands of dollars--the way in which it is delivered is broken. we cannot give adequate advice in 7 min. instead we order costly labs/imaging tests/ prescribe medications that people have seen on TV just to keep our patients happy and coming back and referring every little extra to a specialist. much of what we do is to save time to cram more patients into the day because no one--patients or PCPS are "incintivized' " to do it any other way follow the money and you will find the source of the problem Teri Bunker, FNP