Regence Rate Hike Not Justified

OSPIRG Foundation analysis finds problems, gaps in insurer’s rate filing

OSPIRG Foundation

Health Insurance Rate Watch RATE ANALYSIS:  August 8, 2012
Contact:  Jesse O’Brien, OSPIRG Foundation, 503-231-4181×307 (office), 503-504-8627 (cell)

Regence Rate Hike Not Justified

OSPIRG Foundation analysis finds problems, gaps in insurer’s rate filing

Regence BlueCross BlueShield of Oregon’s proposal to raise rates for Oregonians with individual health insurance plans does not measure up, according to a new OSPIRG Foundation analysis released today.

More than 52,000 Oregonians will see rate hikes of 9.6% on average, and as high as 16.4%, if the proposal goes forward. At the same time, customers in lower-deductible plans will face out-of-pocket costs starting at $2,500 before coverage kicks in.

“Consumers are fed up with paying more and more, and getting less and less,” said Jesse O’Brien, OSPIRG Foundation Health Care Advocate. “We found that a family of four with one of these plans could face as much as $56,520 or more in out-of-pocket costs in addition to premium in case of significant illness. These costs are potentially debilitating for Oregon families.”

Regence customers in the Portland metro area will also face different premium increases depending on their choice of provider network, with those choosing to receive services through Providence or OHSU paying significantly more than those choosing Adventist or Tuality. These changes mean that many Portland-area customers may be forced to switch providers or pay more in premium.

 Key findings of OSPIRG Foundation’s analysis:

• Regence’s medical trend projections are not justified by the data available. Regence has not provided the quantitative data and calculations it used to establish these projections. This information is critical in order for DCBS and the public to evaluate Regence’s justification for this rate increase.

• Regence does not adequately justify the changes it proposes to its Portland-area provider network. Leaner networks can be associated with reduced costs and increased coordination of care, and OSPIRG Foundation supports insurers sharing these savings with consumers who choose lower-cost providers. However, Regence has not provided enough information in the current filing to justify its proposal or to show that the proposed changes will produce sufficient gains to justify the disruptions consumers will experience.

• Regence projects that it will lose 11,577 members by the end of 2013, a loss of 22% of its customers in the individual market. Coming after multiple years of significant membership losses corresponding with large premium increases, we are gravely concerned about the ongoing stability of Regence’s risk pool and its ability to insure its remaining customers in the future.

• As Regence continues to hike premiums, cut coverage and lose membership, its activities have an effect on the stability of the entire individual market. Regence is the largest single insurer in the individual market in Oregon. Starting in 2014, insurers in the individual market will be required to incorporate essential health benefits and other critical consumer protections. But instead of getting ready to implement these changes to ensure a smooth transition, the strategies Regence appears to be pursuing—hiking premiums, reducing benefits and shrinking the risk pool—seem to be moving in the other direction.

• When it comes to reducing costs and improving the quality of care, it is not clear that Regence is doing all it can. With rising costs making health insurance unaffordable for many Oregonians, Oregon needs all insurance companies to redouble their efforts to contain costs – not by raising deductibles and cutting care – but by cutting waste and focusing on prevention and other proven strategies that keep patients healthier.

The Insurance Division of the Oregon Department of Consumer and Business Services (DCBS) is expected to make its decision on the pending Health Net rate request this month.  A copy of the rate filing 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. Last year, 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, putting over $37 million back into consumers’ pockets. Last year, Regence customers saved $12.5 million when the Insurance Division scaled back a proposed rate hike from 22.1% to 12.8%.

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