By Kyung M. Song
The Seattle Times
May 16, 2007
Regence BlueShield on Tuesday began notifying 137,000 individual-plan customers that their premiums are rising an average of 19 percent in July in the steepest increase for individual plans this year by a Washington health insurer.
And for 16,000 of those enrollees, the rate increase will total 40 percent because they also happen to be moving into an older, more expensive age group.
The rate jump is a sharp change from last year, when Regence proposed Ć¢ā¬ā then rescinded Ć¢ā¬ā raising premiums by 5 percent. Since leaving the rates unchanged last July, Regence has gained 30,000 new customers, bringing its total individual members to 137,000.
The rate boost does not apply to people who buy their coverage through employer plans or small-group plans. But both Regence’s rate reversal last year and the size of this latest premium increase have outraged Washington Insurance Commissioner Mike Kreidler, who accuses the insurer of a bait-and-switch.
“I have serious concerns that consumers may have been whipsawed in an effort by Regence to increase market share,” Kreidler wrote in a letter sent Tuesday to state legislative leaders.
But Kreidler has no power to stop the increase.
Charlie Fleet, a spokesman for Regence, said it needed to raise premiums to cover higher claims costs.
“We offer good value to our members,” Fleet said.
http://seattletimes.nwsource.com/html/localnews/2003708848_regence16m.html
Comment:
By Don McCanne, MD
Some years insurers will hold their premiums down in order to gain market share. After their enrollment increases and their competition is diminished, they then raise premiums sharply to recover deferred profits plus provide an additional generous profit margin for current insurance sales. Wall Street dignifies this process by calling it the insurance underwriting cycle, but it is nothing more than a devious bait-and-switch scheme.
Those facing a 40 percent premium increase are not only aging, but many of them have developed significant medical problems. By making premiums unaffordable for this high-cost sector, many will have to drop their coverage. This advances Regence’s business plan to selectively insure the healthy. This totally defeats the very purpose of health insurance: preventing financial hardship for those with medical needs.
A national health insurance program would accomplish this crucial goal by automatically including everyone.