Four proposed health insurance rate hikes lack adequate justification

Media Contacts
Jesse Ellis O'Brien

OSPIRG Foundation

Oregon health insurance companies have proposed their premium rates for next year, and according to new OSPIRG Foundation analysis released today, many have not adequately justified their prices.

Close scrutiny of rate hike proposals is important to make sure consumers are not paying for unnecessary costs. For the second year in a row, an insurer—PacificSource in this year’s instance—has admitted that their initial proposal contained errors that would have overcharged consumers. Meanwhile, this year’s rate proposals are all over the map. Providence, for example, is proposing a 16.3% decrease in rates for comparable coverage.

“With some insurers proposing double-digit rate hikes while others are proposing big cuts for identical coverage, it is more critical than ever to scrutinize the basis for these rates,” said Jesse O’Brien, OSPIRG Foundation Health Care Advocate.

“The more we dig into these proposals,” said O’Brien, “the more we’re concerned that Oregon’s insurers aren’t doing all they can to cut waste. And with study after study showing that one-third of health care spending is waste, we can’t afford anything but a full-court press for more effective use of our health care dollars.”

OSPIRG Foundation conducted an in-depth analysis of rate proposals from four of Oregon’s top insurers: Moda, PacificSource, United and Health Net.

Key findings of OSPIRG Foundation’s analysis:

  • Moda is proposing a 12.5% rate hike on over 95,000 Oregonians, without outlining a plan for passing along cost savings from health reform to their members. Moda has also not done enough to justify its projections of increased costs in several areas.
  • Many Oregon insurers appear to be overstating medical cost trends. With a number of national studies demonstrating a slowdown in health care cost growth in recent years, projections as high as 8.1% (from United) merit close scrutiny.
  • Many insurers are projecting increased costs due to a sicker and more expensive customer base without adequate justification, and in contrast to the view of the country’s leading association of health actuaries. For example, PacificSource projects an 8.3% increase in costs, while other insurers like LifeWise project cost decreases.
  • Oregon insurers do not appear to be doing all they can to reduce costs and improve quality of care. For the first time this year, every Oregon insurer submitted hard data on health care quality, cost and utilization as part of the rate filing process. These metrics represent a step forward for transparency, and they raise important questions for some Oregon insurers. For example, Health Net and United are paying more for emergency room visits than many other insurers, yet they are both proposing big rate increases without demonstrating that they are doing all they can to reduce these costs and help keep their members out of the ER.

The Insurance Division of the Oregon Department of Consumer and Business Services (DCBS) is expected to make its decision on the pending rate requests in August. All rate filing documentation is available on the Insurance Division’s rate review website,  

Background on Oregon’s health insurance rate review program

In 2010, new rules went into effect strengthening the standards that health insurance companies must meet before raising premiums. Insurers must justify rate hikes in writing, showing that they are not excessive and explaining how the insurer is working to reduce costs. All rate filings are public information, available online, and open to public comment. The Oregon Insurance Division evaluates these justifications, and must take public input into consideration. In 2011, the Insurance Division began to hold public hearings on significant rate increases.

Since these changes have taken effect, the Oregon Insurance Division has significantly stepped up their scrutiny of health insurers’ rate hike requests. Since 2010, it made cuts to a majority of requests, cutting over $155 million in waste and unjustified costs from consumers’ and small businesses’ premiums. 


OSPIRG Foundation is a non-profit, non-partisan statewide consumer organization. Please visit us at