Regence BlueCross BlueShield's announcement that some of its customers will face an average rate increase of 8.9 percent, starting Dec. 1, has drawn the ire of some consumer and small business advocates.
"I'm very concerned that Regence refused to try to justify its premium increase in public," says Oregon Sen. Chip Shields, chair of the Consumer and Small Business Protection Committee.
Regence's rate increase marks the latest in a battle between consumer advocates, health insurance providers and the Oregon Insurance Division over the transparency of the rate increase process.
The Insurance Division recently approved a 12.2 percent increase for Providence Health Plans. Regence and Providence originally requested 9.6 and 15.7 percent increases, respectively (Here are links to the OSPIRG reports on the Regence and Providence rate increase proposals).
The decision is part of a new approach to pricing health insurance premiums based on hospital based networks.
For example, Portland area residents can pick from one of five networks, depending on what suits them the best. Cheryl Martinis, the communications director for the Insurance Division, says they will be listing the different prices and rate increases on their site.
"We think, actually, the approach to pricing will foster transparency by showing people the variance in rates that exist among hospitals and doctor groups that provide the same services," she says. "We think that kind of transparency may actually help drive down medical costs."
In the case of Regence, individual members who purchase health insurance on their own will be the only ones subject to the increase. According to Scott Burton, of Regence Strategic Communications, this will only affect 52,000 members out the 730,000 people the company serves statewide.
Regence officials discuss 2011 rate increases with the editorial board of the Statesman Journal.
In addition to raising rates, Regence will also no longer cover routine eye exams and will increase out-of-pocket costs.
Some plans will no longer cover mental health services. According to Burton, Regence still offers the Evolve HSA plan, which offers mental health coverage and has five pricing options.
Jesse O'Brien, a consumer advocate for OSPIRG, says that while the changes might save some money for consumers, the larger rate hikes, increases in out-of-pocket costs and premiums will mean that "customers will be exposed to a substantially increased risk of financial hardship in the case of illness."
Another sticking point for consumer and small business advocates is that proprietary documents weren't allowed to be reviewed in a public setting.
"The Oregon Insurance Division, which is the administrative entity that makes these decisions, determined in a closed door meeting with Regence officials that some of the documents justifying Regence's proposal to alter its Portland area provider network were trade secrets and wouldn't be made publicly available," says O'Brien. "We feel that this raises questions about the transparency of their rate review process going forward and it's concerning for us."
The Affordable Care Act requires an insurance company to explain any rate increases above 10 percent to its state and federal Rate Review program.
In the case of Regence's most recent hike, which falls below 10 percent, Oregon HB 2009 says that all rate increases must be reviewed by the state, which includes an independent review by OSPIRG and a public hearing.
Burton says both of these steps were taken in accordance with state protocol.
He says that the company did justify its rate increases in a public hearing on July 30.
An Aug. 24 story from the Lund Report, a healthcare watchdog site, suggested that Regence was declining to publicly share information on how it determines its rate increases. A letter the blog obtained from Regence President Don Antonucci to Insurance Division officials said that doing so "would result in competitive harm to Regence and, more importantly, its current and future members." The company offered to let officials review the process at their Portland offices.
Martinis contends that they did post information on their website about why certain documents were considered "trade secrets," as well as other information letting the public know the details of the process.
"We announced on our website that we were going to look at these documents," says Martinis. "Provider contracts are confidential by Oregon law which protects trade secrets. We aren't allowed to put them on our website, like we did with every other document that was part of this filing."
Charlie Ringo testifies about the effects of Regence rate increases at a past hearing.
Some have questioned what qualifies as "trade secrets" under Oregon law.
In response to the Regence decision, Larry Kirsch of IMR Health Economics made a public records request for documents provided by Regence that substantiate why their info should be safeguarded under the trade secrets exemption, as well as documents provided by the Insurance Division, explaining why their findings favored Regence's request.
He says that under Oregon law, "You have to make a showing that releasing this information would be detrimental to competition. You can't simply say, 'It's our view that this would harm competition.'"
"You could show, for example, that certain kind of information in the hands of certain competitors is going to be used for price fixing."
Kirsch says that some of the confidential information he is requesting could actually be pro-competitive.
In a 2009 memo (To read the pdf, click here.) he expressed these same concerns to Teresa Miller, formerly of the Insurance Division.
In it he wrote, "Analysis suggests that the exemption claims filed by requesters and the stipulation agreements entered by the parties were often at odds with applicable economic theory of the competitive process (harm to competition) and inconsistent with marketplace facts (Oregon Individual insurance market subject to Oregon laws and regulations). In general, the exemption filings tended to be conclusory rather than fact-driven and highly speculative."
Shields says that states with a more robust review process tend to get better results. Specifically, he says the rates are lower when the level of transparency is higher.
Small businesses will be hit particularly hard by the increase, says Shields.
"This type of an increase, on top of double digit increases of the past, is socking small business owners and others in the individual market; it is socking them square in the gut," says Shields.
For example, during a testimony for the Consumer and Small Business Protection Committee, Oregon small business owner Diane Frank said her premiums with LifeWise went up from $273 in 2007 to $580 in 2010. At the time, her premium was set to go up to $667 for 2011, under a proposed 15 percent increase. During her testimony, she said these premiums made her business unsustainable.
This video from myrateincrease.com discusses a testimony from Oregon small business owner Diane Frank, who said LifeWise Health Insurance's premium increases were making her business unsustainable.
Both Shields and OSPIRG agree that transparency is at the heart of this issue.
According to Shields, "These issues are too important for small business to have them determined behind closed doors."
Editor's Note: An earlier version of this story contained factual errors. It stated that all of Regence's customers would face an 8.9 percent increase when that will only be affecting some members. The original made a claim that Regence is no longer providing mental health services. The company is taking those services out of some plans. The original article also implied that Regence didn't hold a public hearing for their rate increases. One was held on July 30 but advocates argue it didn't constitute full disclosure. The Skanner News apologizes for these errors.